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Washington County home sales up 2 percent

February 03, 2013|By ARNOLD S. PLATOU | arnoldp@herald-mail.com
  • Ripple Drive Williamsport, Md.
By Joe Crocetta/Staff Photographer

Washington County’s home sales market bumped up in 2012 over the previous year for its first annual increase since before the recession.

Sales rose 2 percent to $187.7 million in total purchases, compared to $183.5 million in 2011, according to data from Metropolitan Regional Information Systems Inc.

The price of homes sold jumped about 8 percent, the MRIS data shows. Although fewer properties were sold, those that did sold much faster than at 2011’s pace, the data shows.

This is good news, but there’s a bad side to it, too, said Betty Hays, president of the Pen-Mar Regional Association of Realtors, which has more than 500 members in Washington County and in Pennsylvania’s Franklin and Fulton counties.

First-time homebuyers are in the $100,000 to maybe $150,000 range, said Hays, who noted “that price range is very active right now.”

Buyers have “come out now because interest rates are down,” and the fiscal cliff and the presidential election have passed.

Although prices are rising, there aren’t enough houses for sale in the next-highest price range for home sellers who want to move up, Hays said.

“There’s a lot of neighborhoods where houses were selling for $450,000 five years ago that are selling now for, say, $250,000 or $350,000,” Hays said. As a result, not many of those owners are putting their homes up for sale yet, she said.

Hays said she expects the bottleneck to ease as prices climb.

“They can’t get perhaps what they paid, but lower inventory is going to make those prices go up,” Hays said.

“The good news is, overall, prices will start to go up. They’re not going to reach the bubble,” she said, referring to 2006’s peak prices.

“With the law of supply and demand, they’re going to go up. And, I think, more buyers are starting to go into the market right now because interest rates are so good,” she said.


Buyers coming back

The market’s upward turn here is being mirrored in some ways by what is happening nationwide.

Limited inventory is maintaining an upward momentum in home prices, according to the National Association of Realtors.

“Total sales in 2012 were the highest in five years, while the annual price rose the most since 2005,” NAR said.

“Record low mortgage interest rates clearly are helping many homebuyers, but tight inventory and restrictive mortgage underwriting standards are limiting sales,” NAR chief economist Lawrence Yun said.

According to the Federal Home Loan Mortgage Corp., known as Freddie Mac, the national average rate for a 30-year conventional fixed-rate mortgage was 3.42 percent as of Jan. 24. A year ago, the average rate was 3.98 percent, its website showed.

“The number of potential buyers who stayed on the sidelines accumulated during the recession, but they started entering the market early last year as their financial ability and confidence steadily grew, along with home prices,” Yun said.

“Likely job creation and household formation will continue to fuel that growth. Both sales and prices will again be higher in 2013,” he said.

Nationwide, NAR’s preliminary data shows that the median price of existing homes sold in 2012 was $176,600. In 2011, the median was $166,100; and in 2010, it was $172,900.

In general, the median price measures the midpoint in the range of selling prices, so a few high- and low-ticket deals don’t skew the result.


Ups and downs

In Washington County, the median price jumped to $149,000 — rising almost 8 percent over 2011’s median of $138,000.

The 2012 increase was the county’s first since 2006, when prices reached their peak.

In a time of easy loan deals, a house-buying frenzy had started nationwide. Here, the median price that people were paying for houses shot up from $149,900 in 2003 to $176,500 in 2004 to $225,000 in 2005 to $231,750 in 2006.

It was not uncommon to hear stories of prospective buyers lining up to tour “for sale” houses and then bidding the prices higher than the asking price.

Here, the average time it took to sell a house quickened from 71 days in 2003 to 55 days in 2004 to just 48 days in 2005 before slowing to an average of 93 days in 2006, MRIS data shows.

For the county housing market overall, 2005 was the biggest of the boom years. In all, 2,237 properties were sold for a total of $573 million.

Nationally, experts warned that the surge in home prices couldn’t last forever. They called the surge a “bubble” that eventually would burst.

The slippage began sometime in 2006.

As the adjustable interest rates increased for many of the new mortgages, so, too, did the monthly payments. Americans, realizing the riskiness of their subprime loans, suddenly were not far from the foreclosures and bankruptcies that have become common.

On the brink of all that, the county’s housing market still seemed very strong in 2006. A total of 1,599 properties were sold that year, with sales totaling $415 million.

Officially, the nation had slid into recession by late 2007.


Economic signs

As demand fell, so did prices.

And so, too, did the number of houses people were putting up for sale.

Among Realtors, the latter is called “inventory.” Among economists, it’s called “supply.”

As supply falls, prices generally rise.

Basically, along with lower interest rates, that’s what is pushing the price of housing higher here now, Realtors said.

Since 2009, the year the nation’s recession officially ended, the inventory of local houses for sale has shrunk about 44 percent. Retirees, families needing to move because of job transfers and others continued to put their houses on the market, but in fewer numbers, and the supply fell from 1,119 in December 2009 to just 622 in December 2012.

As the supply dwindled, MRIS data shows, the number of properties sold dropped to 1,145 — 65 fewer than in 2011 — but three economic signs perked up:

• Sales got speedier.

In 2012, from the time the property was listed to the time the deal was cinched, the average time was 118 days — a full month sooner than the 148 days it took in 2011.

Speed-wise, there still is a ways to go to get back to the pre-recessionary pace. During 2005’s record-setting boom, the average sale took just 48 days.

• Prices got closer to what sellers wanted.

On average in 2012, a property’s settlement price was 89.2 percent of its average list price. By comparison, it was just 83.9 percent in 2011.

Back in 2005, when many buyers were bidding up prices, the average final price was much closer — 98.5 percent — to the original list price.

• Prices rose.

In the 15 months from October 2011 through all of 2012, the median price in sales deals has jumped every month except four over its year-ago month.

Amid such newly positive signs, there is at least one that could raise worry.

It is that the four exceptions — the four months when the median price was less than the year-ago price — include three that are very recent.

The median in September 2012 of $130,000 was more than 9 percent lower than the median in September 2011. The median in October 2012 of $139,500 was almost 17 percent less than the median in October 2011.

And the median in December 2012 of $134,950 was more than 3 percent less than the median in December 2011.

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