Is it a buyer's market or a seller's market? In Berks County, the answer to that question depends on price range and property taxes.
I am often asked about the state of the real estate market here in Berks County -"Is it a Buyer's or Seller's market?". It's a good question that has several answers. In this article, I will attempt to answer the question using home sales analysis going back ten years. Are you ready?
The Present State of Affairs
Through April 2019, the real estate market here in Berks has been chugging along quite nicely. So far we have seen 2,057 homes listed, 1,941 pending sale, and 1,346 sold at a median sale price of $164,250, up 8% from the same period in 2018. The average time a home is on the market dropped from 80 days in 2018 to 68 days in 2019. Sounds like a seller's market, right?
Taking A Deeper Dive
Residential homes between $100,000 and $300,000 performed rather well. There were 1,386 listed through April, 1,396 pending sale, and 960 sold (71% of the total sales market) at a median sale price of $170,000. Days on the market were an astoundingly low 57 days, down from 74 days in 2018.
Residential homes between $500,000 and $1,000,000 were a different story. There were 51 listed through April, 25 pending sale, and 12 sold (Less than 1% of the total sales market) at a median sale price of $585,000. Days on the market were at an astronomical figure of 443 days which was way up from 254 days in 2018.
Looking to the Past to See Where We are Now
Ten years ago we were coming out of the crash of 2008. The first quarter of 2009 gave us a look at the statistical carnage left in its wake.
Home sales in Berks County in January through April of 2009 were reasonably robust considering the deep dive some parts of the country experienced. The median sales price of homes between $100,000 and $300,000 was $165,000. In 2019 the median is $170,000, a 3% increase. The interesting statistic is days on the market. In 2009 the average time for a home on the market in that price range was 137 days. Compare that to just 57 days now, a drop of 58%!
The numbers are somewhat different in the $500,000 to $1,000,000 house category. The median sales price in 2009 for homes in that category was $596,000. Compare that to today's median sale price of $585,000, a drop of 2%, and you see the market for upscale homes in Berks during that bleak period of economic uncertainty was a bit better than it is today. Of even more concern is the days on market statistic. Back in 2009 upscale homes were on the market an average of 336 days compared to 443 days today, which is an increase of 32%.
Imagine, sales prices for luxury homes in Berks were higher in 2009 and sold 32% faster, amazing? No one would have said it was a seller's market in 2009. But why? Could it be that during the same ten-year period property taxes countywide have risen somewhere in the range of 20%?
The Property Tax Issue
Consider the following: If you owned a Berks County home in 2009 and your property taxes were $6,000. Since then, it is possible those taxes have gone up 20% to $7,200, or $100 per month. That $100 is equivalent to a mortgage value of approximately $21,000 at a 4% interest rate. Technically, that means someone is paying $21,000 more to own your house due to the higher tax expense than they would have ten years ago. Now consider a house with double those taxes and it is not hard to see why some of the higher value homes here in Berks are not seeing the "Seller's Market" those in the median range are.
Please take note; it is an election year. Make sure those you are voting for understand the effect outrageously high property taxes have on everyone. It is interesting to wonder how good the Berks County real estate market would be if property taxes were in control.
Knowledge is Power!