Available home inventory in Reading, PA, and Berks County are at historic lows. Let's take a look at how the law of supply and demand is affecting local house values.
Low home inventory can have a great influence on what is for sale when employing the law of supply and demand. At the time of this writing, there are approximately 1,456 single-family residential property listings for sale in Berks County. Let's take a look at past available property listing statistics and see where today's number ranks.
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Housing starts or new home construction is still at all-time lows. Most of us remember what happened to the housing market and economy in 2008. I can tell you most land developers and builders are still trying to forget it. Berks County has never been an easy area to start a housing project. Berks is consistently at the top of the list when it comes to land preservation. In 2008 many builders and developers pulled existing housing projects and stopped looking for new ones due to the economic bust. As the economy slowly recovers so does new construction in our area. The simple fact is you do not propose a new home community in Berks and have it approved in 2 weeks. In some cases, it takes years before projects are available and even longer until the actual home site is ready for the public.
Homeowners have seen no significant increase in Berks County home values in the past nine years. When property values do not significantly increase, it is hard for owners to gain equity. If the owner does not have equity, it makes it hard for them to sell their home and buy another. In some cases, all their equity is eaten up in the costs to sell the home, commissions, taxes, seller credit, etc...
So how has ever increasing low home inventory affected home sale prices in Reading, PA, and Berks? Again pointing to the chart, you can see the median price in 2008 was $160,000 and in 2016 it was $150,000. The numbers are not out for March of this year, but in February of this year, the median price was $136,000.
It seems that lower inventory and more sales are not having the positive cumulative effect on home prices here in Berks one would expect. This condition is indicative of other underlying economic factors. These factors include things like taxes, jobs, etc. Another factor could be the ratio of first time home buyers to buy-up buyers. If existing homeowners cannot afford to buy up then the overall market is largely relegated to first time home buyers. Historically first time home buyers spend less than buyers who are selling and buying up.
I certainly believe that our areas best days are ahead of it. Property taxes in Berks County have always been a tremendous burden to property values. When these taxes go away, new home construction can once again flourish and create positive value leadership. Goodness knows all we need is a spark and with inventory levels at historic lows, our house market is poised to explode.
Knowledge is Power!