ALLENTOWN, Pa. — Housing affordability is on a downturn in the Lehigh Valley, according to the Greater Lehigh Valley Realtors.
- Housing affordability is at a low, in part because of high interest rates and low inventory,
- Some of the factors are seasonal
- The housing market is getting healthier, but demand will stay high as millenials come of age
“One of the reasons is that there is low inventory, which is partially driving up housing prices, which, obviously then everything's just more expensive. And so that could price out some people,” said Mallory Siegfried, the Realtors group's communications director.
“And then there's also the higher interest rates affecting the cost of 30-year mortgages. Mortgages, the cost is double of what it would have been last year. So it's a combination of those things.”
High interest rates also are contributing to the low inventory, Realtors Chief Executive Officer Justin Porembo said.
“Buyers are delaying home purchases in hopes rates will drop, while many sellers are holding off on listing their homes due to weakening buyer demand and to not trade in their current lower rates for significantly higher borrowing costs on their next property,” Porembo said in a release.
“As a result, existing-home and pending home sales have continued to slow as we move into winter.”
According to historical data from GLVR, sales usually peak in June and July, and there usually is a decline in sales at the end of the year. Siegfried emphasized that isn’t necessarily anything to be worried about.
“Real estate just is generally cyclical,” Siegfried said. “So it was just kind of normal for Pennsylvania and the winter. Not everyone wants to… they're settled in for the year or the school year.”
Michael Naratil, multiple listing service director for GLVR, said, “it's less advantageous to move when you get storms. It's not quite ideal."
“The biggest thing is that it's not all scary. It sounds scary, probably at first glance, but the market is actually in a way, getting healthier in that, for buyers, they're not lined up with people around the block for one property.”Mallory Siegfried, director of communications for Greater Lehigh Valley Realtors
It's becoming more of a buyer’s market, according to Siegfried, as sellers lose some of the leverage they’ve had during the boom of the past couple of years.
“Buyers are kind of back in the driver's seat a little bit more,” Siegfried said. “Sellers aren't getting quite above asking price like they were; it's leveled out.
"And so the National Association of Realtors agrees that things are kind of moving in a healthier direction. Prices are higher, but not quite so intensely higher. Buyers are not fighting with multiple offers as much as they were, which means they might be able to have more of a chance to get the home.”
Inventory is going up marginally, despite the seasonal downturn, which takes some of the pressure off of buyers, the Realtors said.
“With a lot of properties, [buyers] were waiving inspections, doing a lot of different things to get into a property and waiving a lot of things that they wouldn't normally waive in a healthy market,” Siegfried said. “And now those things are coming back. So people are doing inspections and doing their due diligence before they make the purchase.”
As the market gets healthier, however, there won’t be respite from housing demand any time soon, the group said. Millennials are coming of house-buying age, and there simply isn’t enough supply, with new developments being too expensive for the average person and less existing inventory on the market.
“Especially the Lehigh Valley, I don't know that we'll ever lose that demand just with our location,” Siegfried said. “In general, this will always be a popular area to live to work, there's a lot of job opportunities, a lot of entertainment opportunities.
"It's a great location between Philly and New York and so it just is a very desirable area. And so demand for this area I don't think ever wane. So demand will definitely continue to be what it is and will only increase.”
Siegfried has one takeaway: “The biggest thing is that it's not all scary.
"It sounds scary, probably at first glance, but the market is actually, in a way, getting healthier, in that, for buyers, they're not lined up with people around the block for one property.”
