Let’s take a look at the year that was 2018 and see if it offers insight into what’s in store for 2019 as it relates to real estate here in Reading and Berks County.
Yes, it is that time again! Time to reflect on the year that was and time to dust off the crystal ball and see if it can foretell what the future holds. It is my humble opinion that the big real estate story here in Reading and Berks for 2019 was the low home inventory. Yes, I believe it is even a bigger story than the ever-rising property taxes that plague our area year in and year out.
Home Inventory ~ Supply and Demand
With just four calendar days left in 2018, there have been 6,344 residential homes listed for sale. A total of 6,833 homes were listed in 2017, a year-over-year decrease of 7.1%.
Home sales for 2018 are at 5,055 units compared to 5,325 units in 2017, a decrease of 5.1%. Even though there were fewer sales in 2018, the ratio of sales to listings is better. The result of an improved listing to sales ratio is often climbing home prices and fewer days on the market. In 2017 the time a house was on the market until it sold was 99 days. That number dropped to 76 days on market in 2018. Here is where things start to make less sense. The median sales price of a residential home here in Reading and Berks County in 2017 was $164,900. Even with the low inventory, good listing to sales ratio, and lower days on market, the median price only climbed to $164,990. Yes, a slim $90!
Mortgage Interest Rates
There was a lot of noise this year regarding rising interest rates. The year started with 30-year mortgage rate around 4%. Presently rates are around 4.625%, down from 5% in November. For comparison sake, 2017 began with mortgage rates around 4.3% and ended at 4 % as mentioned earlier.
I believe when it comes to mortgage rates it is more about consumer perception. Rates dipped to below 3.5% in 2016 and have since rebounded approximately 1%. Most interest rate prognosticators believe that mortgage rates will top out around 5.5% in 2019. If that happens, it will be a rise of 57% since their lows in 2016. That is the kind of number that makes news and sells papers. In real dollars, the difference between a $100,000 mortgage payment at 4% and 4.625% is approximately $37 per month. In any case, rising interest rates, perception or not, is never really good for property values.
Thoughts and Predictions
As I have stated in the past, home values here in Reading and Berks are more a product of policy and law than statistics. Until we get a grip on out of control property taxes, all other sales metrics remain a distant second. High property taxes are hurting the new home market which aids in keeping home inventory absurdly low. Improving what is fast becoming an aging population of homes can be a problem if they are reassessed due to existing tax policies. Owning a home above $400,000 often comes with property taxes that have an aggressive negative impact on the homes true value. Without upside leadership from the new house and upscale market, our area may continue to be value capped.
We are about to finish a year which saw low home inventory, good sale to listing ratios, rising but handleable interest rates, and a rising national economy and yet our median home prices barely moved. How many years will these good housing statistics prevail? What will happen if interest rates start to rise, the national housing market cools, and the economy waivers?
I believe the Reading and Berks County real estate market is likely to be a carbon copy of 2017 and 2018. The low inventory will likely continue and our strongest sales months will be June through August. Watch out if interest rates start to move faster than expected, the national housing market cools too quickly and the media jumps on a “Sky is Falling” mantra. These events would likely lead to increased inventory due to lack of buying and then all bets are off.
Listen to me on WEEU in January for much more on this subject, and remember. Knowledge is Power!
Happy New Year!
Jeffrey C. Hogue
Reading and Berks home sales were on fire throughout most of 2018. Will fall and winter bring a cool to the real estate market? Let’s see if the latest home sale statistics can help us better anticipate the near future.
It is the time of year when I am often asked if it is wise to sell a home with the holidays fast approaching. Most that pose the question have already surmised that trying to sell a home in winter is less lucrative and more difficult. While perception is often reality, I like to see what the numbers say. Let’s take a look.
Reading and Berks Housing Trend – The Numbers
Inventory of available properties in Berks County remains at historic lows. As of November 8, 2018, there are 1,233 available homes which is almost a 20% decrease from November 2017. The home Inventory numbers continue to reflect positive value trend.
Sold and settled homes in Berks County from January 1 through November 8, 2018, totaled 4,571 units, a 4% decrease from the same period in 2017, (4,759 units). It is interesting to note that home sales from January 1 through July 30, 2018, totaled 3,084 units which are all but identical to the number in 2017 during the same period (3,079 units). What is impressive about the 2018 figure is the sales number was achieved with the 20% decrease in overall inventory. Equally remarkable is that the median home sale price in July and August hit a high of $180,000 according to the Trend Market Trends report, a feat we have not seen in Reading and Berks real estate going back over ten years! A pure case of supply and demand working to push housing prices up.
Reading and Berks Housing Trend – Have We Peaked?
Home sales numbers from January through July 2018 outpaced overall 2017 sales in 6 out of the seven months. Since then sales have decreased compared to the 2017 totals. From August 1 through November 8, 2018, there have been 1,487 total sales compared to 1,680 in 2017, a decrease of 11.4%. Most notably was the month of September which saw 430 sold properties in 2018 compared to 552 in 2017, a decrease of over 22%. Fortunately, the median price held up in September at $172,000, an increase of 1.2% over the 2017 figures according to the Market Trends report.
Should I wait Until Spring To Sell My Home?
I recently spoke with a friend who relocated to Arizona from Berks several years ago. He told me how hot (literally) the real estate market was there. His impression was that they sell 3,000 homes a month in the Phoenix area and only a handful in Berks over the holidays and winter.
As I stated earlier, perception is everything, but numbers do count. December was the 6th busiest month for Berks property settlements in 2017 at 450 units sold. That number was higher than the March and April figures of the same year. The stronger than perceived “Off Season” data is in part due to a phenomenon I like to refer to as “The Holiday Effect.” You can read about it in an article I did in 2013 ~ Berks County Home Sales & the Holiday Effect. Also, check out the Holiday Home Selling Guide.
The internet has certainly changed how people shop for homes and has diluted the home sale seasonality argument to a degree. If you need or desire to sell your home now, then do so. I believe the real estate market here in Reading and Berks is still strong, but the winds may be changing. One thing for sure is that I will be watching the trend so to inform my clients better no matter what time of year it is.
Knowledge is Power!
Jeffrey C. Hogue
If the weather gets as hot as the present real estate market here in Reading and Berks County, you better make sure your Air Conditioner is in good working order. Here is a look at some statistics on what’s moving the Reading-Berks real estate market.
People often ask me when is the best time to sell a home here in the Reading-Berks area. My sarcastic answer is “When the market is hot.” My seasonal answer is somewhere between April and July. Right now both scenarios are in play.
As of this writing, there have been 1,277 homes sold and settled in Reading-Berks according to the Trend MLS statistics. Over the same period last year, there were 1,377 sales, a drop of 7.2% While the decline in sales is not indicative of a hot real estate market it is to be expected as the number of available homes plummets.
Presently, there are 1,243 single-family homes available. 221 Of these are in the City of Reading Another 214 are not built leaving a total of 808 homes available in all Berks County suburbs. At the end of March 2017, there were 1,641 total homes in inventory (Reading, Berks, and unbuilt). These statistics represent a 24.2% drop in housing inventory overall. If we consider the inventory drop (24.2%) and calculate it into the number of sales in 2018 to date (1,277), the adjusted sales figure would be Approximately 1,550 homes. This figure would be a 12.5% increase in total sales year over year which is much more indicative of a healthy real estate market.
Where things are really heating up in the Reading-Berks real estate market is in the number of pending sales. At the end of March 2017, there were 433 pending homes or homes under contract awaiting settlement. In March of this year, there were 376 homes pending sale or an increase of 9.9% according to Trend.
Looking Behind The Scenes
I believe a robust real estate market needs consistent leadership. This leadership comes in the form of new home and luxury home sales. New homes and luxury real estate are the tides that raise all boats so to speak; they take the lid off the pricing and appraisal kettle.
Last year at this time there were 61 new homes sold in Berks County. This year there are 55. The good part of this is that there are presently 43 new home sales pending. I believe as the weather improves, and how can it not, things in the new home area will get stronger. We are on pace to equal or better last year’s total new home sales of 261 units.
The luxury market is the laggard of the group this far. Last year at this time five homes settled over $400,000. This year there are just three sold and settled with five pending sales. Conversely, our neighbor to the southwest, Montgomery County, has 111 sold homes over $400,000 and 156 pending.
The factors Moving the Reading-Berks Real Estate Market continue to be low housing availability. I expect the inventory to increase for seasonal reasons but remain historically low. Rising interest rates are still a positive motivator for buyers to get out and purchase now but that effect will only work until the mortgage rates are too high.
It is my firm belief that high property taxes are negatively affecting both new and luxury home sales. It is just another way our abominably high property taxes adversely affect our whole community. If we are to have a positively sustained housing market here in Reading and Berks County we need to see growth in the new and luxury market going forward. Let’s hope our esteemed legislators get the tax situation worked out.
Knowledge is Power!
Jeffrey C. Hogue
We have reached the middle of the calendar year and the Reading, PA, and Berks County real estate market statistics are in. Let’s see if things heated up during the spring and summer seasons.
Wow! It’s August already, and the summer home selling market is quickly drawing to a close. The summer season has brought its share of rain to our area, but it did not seem to dampen the spirits of home buyers and sellers here in Berks.
Inventory remains at historic lows which often precipitates a rise in home prices. According to Trend MLS statistics, at the end of June, there were 1,770 single family homes for sale here in Berks, which is an almost 18% drop from the 2016 number of 2,152 during the same period. The drop in overall home sales was much thinner coming in at 2,296 units, which is 1.67% lower than the 2,335 units sold during the same period in 2016. The Berks median home price was up 3.95% to $158,000 over the same period in 2016.
Seller credit to home buyers was present in a staggering 54% of all sales through the period. Between the price ranges of $100,000 to $200,000, the seller credit average was an even more astounding 65%, or almost two out of 3 home sales. It’s hard to ascertain what the average seller credit amounted to without looking at every home sale individually. It may be safe to estimate the average credit to be somewhere around 3% since the allowable limit for many deals is as much as 6%. A 3% average seller credit on 54% of all home sales here in Berks County would lower the median price increase from 3.95%, which I call the gross median, to around 2.40%, which I call the net median.
For comparison sake, seller credit in Montgomery County is present in almost 39% of all home sales and only 35% in Chester County.
One of the other key factors is the sale price to offer price percentage which is up to 94.61%. The Sale to Offer percentage is a calculation of how much a home was listed for and how much was offered. Example using the above percentage; A home is listed for $100,000 and sells for $$94,610. The higher the number the closer a home seller gets to asking price. Before 2008 the Sale to offer percentage held pretty steady at 97.2%. After 2008 the percentage dropped to nearly 90%.
Overall the Reading, PA, and Berks County real estate market is doing fairly well. I am hopeful that the second half of the year is even stronger. After all, few places in America can rival the scenic beauty of Berks during the autumn months. Imagine how good it would be if we get those property taxes under control. Vote well this fall!
Knowledge is Power!
Jeffrey C. Hogue
It is already April, the flowers and trees are in full bloom, and the real estate market in Berks County is in full swing. Let’s take a look at the hottest home markets in our area thus far.
According to the Trend MLS, there have been 1,175 homes sold in Berks County From January 1 through April 20, 2017. The number of home sold in the same period in 2016 was 1,108. The figures show there has been six percent increase in home sales year over year. Home sales continue to rise even with declining inventory. The numbers are a very positive economic indicator of which direction home prices should go, up!
So what about Berks home prices?
The median value in March 2016 was $150,000 while the median value in March of this year was $155,000, an increase of 3.3%. The average home sale in March of 2016 was $173,000 and the average for the same time this year was $168,000, or a decrease of 2.9%. I will spare you the dynamics of the difference between median and average value. The numbers point to a bottom-up market which means that lower valued homes are moving up and higher valued home sales are limited.
Where are the Hottest Markets in Berks County?
I will use the 17 school districts in Berks to define which are on the rise in home sales year over year. Since all school districts have different demographics, I will grade by percentage of sale.
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There you have it! According to the number of sales year over year, the Schuylkill Valley School District is one of the hottest home markets in Berks County to date.
It will be interesting to see how things shape up as we enter the late spring and summer months. Stay tuned!
Knowledge is Power!
Jeffrey C. Hogue