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Area housing market down in third quarter

Residential units sold down 12 percent from third quarter last year; median home-sale price decreases 3 percent
Jason Scott Reporter email
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By Jason Scott, Sentinel Reporter, October 9, 2008

Last updated: Thursday, October 9, 2008 12:50 PM EDT

The median home-sale price in Central Pennsylvania was down 3 percent during the third quarter of 2008, according to statistics from Central Penn Multi-List and the Greater Harrisburg Association of Realtors.

The median price of residential homes was at $168,000 for the quarter in 2008, compared to $173,000 in 2007.

The median sale price is the midpoint, meaning half of homes sold for more and half sold for less.

“For the first time in recent memory, our area saw a decline in the year-over-year median home-sale price,” said Kay Hock, president of the GHAR. “However, we remain cautiously optimistic because our market continues to show healthy levels of activity, despite the turmoil happening with the national economy.”

With falling prices, the number of residential housing units sold in the third quarter also dropped 12 percent — from 2,411 units sold last year to 2,127 this year.

Listings stayed on the market an average of 70 days in the third quarter of 2008, which is up from an average of 57 days in 2007. The number of active listings also rose, to 4,666 at the end of the quarter, compared to 4,437 active listings at the end of the second quarter of 2008.

While the median sale price declined, the average sales price went up, increasing to $194,074 for the third quarter of 2008 -- up from $182,028 for the first quarter of this year.

Stable market

Hock and other area real estate professionals insist the central Pennsylvania region remains better off than most of the country.

Mike Green, president of The Homestead Group Inc. in Camp Hill, attributed that to the area’s strong employment and stable industry.

“Employment is really the key,” Green said, noting the heavy trucking industry, as well as high numbers in government, medical and education jobs.

The area market has also been fortunate in that only a small number of loans originated from speculators and unqualified buyers, he explained.

“Since no bubble was ever inflated, there is no bubble now to burst,” Green said, pointing out that average appreciation has been around 4.2 percent since the housing boom began in 2000 — right where the historical trend indicates it should be.

At least three consecutive months of stability in sales will be a strong indication that the market is starting to come back to normalcy, he said, adding that experts are saying that will happen by the fourth quarter next year.

National trends

Across the country, existing-home sales decreased in both July and August. According to statistics from the National Association of Realtors, sales decreased 13.2 percent from July 2007.

NAR also reported that sales decreased 10.7 percent in August 2008 compared to August 2007. The national median existing-home price was $212,400 in July and $203,100 in August. Both months’ median prices are down from median existing-home prices in July 2007 ($228,600) and August 2007 ($224,400).

Regionally, existing-home sales in the Northeast decreased 11.8 percent in July 2008, compared to July 2007. Sales also decreased 15.0 percent in August 2008, compared to August 2007. The region’s median sale price was $278,700 in July and $271,000 in August.

“In light of what is happening in the national financial sector and with the national economy, I am pleased to be working in a market that continues to show steady sales and home-sale prices,” said Robert J. Hoobler, broker of record at Exit Platinum Plus Realty in Camp Hill. “Although we have seen declines, our market once again has performed better than other areas of the country.”

Tougher loan standards in place



Area mortgage lenders like MetLife Home Loans in Camp Hill have seen a 30 percent decline in home lending since last year.



“We can’t do the mortgages we did a year ago,” said Jim Rineer, branch manager, citing more stringent standards for home loans today. “I think the economy is scaring some people.”



Last year, prospective homebuyers with a credit score in the mid-500 range could get a loan. Now if they are below 580, they are getting denied in most cases, he said.

Along with the strict credit scoring and changes in qualifying ratios needed to get a loan, some financing programs, including 100 percent financing for first-time buyers, have been eliminated.



“If you’re thinking about buying, go get yourself checked out first,” Rineer said, noting that most real estate agents will want valid pre-approval before people are even able to start looking at homes. “FICO scoring is more important now than it’s ever been.”



Fair Isaac Corporation developed the FICO scores, a measure of credit risk, that are the most used credit scores in the world.



The current crisis has also made it harder for those looking to invest in real estate, Rineer explained.

“You used to be able to do 100 percent financing. Now they want 10 percent down to do that,” he said, which may be discouraging people from buying investment properties.