With the release of a new Annual Report on the local housing market, the Greater Lehigh Valley REALTORS® (GLVR) has continued its reign as the premier source of real estate information in the Lehigh Valley and its surrounding communities.
The Annual Report offers a snapshot of eye-opening information that spans a five-year period. The information that follows is an overall look at the 2016 housing market, in addition to our predictions for 2017.
2016: A Measured Success
After several years of housing market improvement, 2016, as predicted, was not a pronounced triumph but more of a measured success. Markets took a steady and mostly profitable walk from month to month. Even as supply was short and shrinking, sales and prices were often increasing.
In 2016, we saw pending sales increase 6.5 percent to 7,996 to close out the year. Closed sales increased 7.2 percent to 7,876 in 2016. Inventory was lower in year-over-year comparisons. There were 2,025 active listings at the end of 2016. New listings decreased by 8.7 percent to finish the year at 11,400.
Home prices rose compared to last year, and sellers received 97.2 percent of their original list price received at sale, a year-over-year increase of 0.6 percent. The overall median sales price was up 2.9 percent to $178,000 for the year. When inventory is low, and demand is high, prices will rise. Prices should increase in most areas in 2017 but at a slower growth rate. Single Family homes were up 4.1 percent compared to last year, and Townhouse-Condo homes were up 1.8 percent. We will likely need years of improved wage growth to account for recent price gains.
Inventory Woes with a Touch of New Construction
Low home supply is expected to continue throughout 2017. While new construction is being seen throughout the Lehigh Valley, the properties are still being built, and the majority aren’t yet ready for sale. We don’t expect to see the benefits of this new construction, which is still lagging behind as a whole, until future years.
Interest Rates and You
Interest rates were expected to rise throughout 2016, but they did not. Just as happened in 2015, the Federal Reserve waited until December 2016 to make a short-term rate increase. Incremental rate hikes are again expected in 2017.
Mortgage rates, meanwhile, are not expected to grow by more than .75 percent throughout 2017, which should keep them below 5.0 percent. If they rise above that mark, we could see rate lock, and that could cause homeowners to stay put at locked-in rates instead of trading up for higher-rate properties. Such a situation would put a damper on an already strained inventory environment.
Who’s Buying? Some Millennials, Many Boomers
Millennials continue to command attention as the next wave of home buyers, yet the rate at which this massive population is entering the market has been less than stellar. This may be due to a cultural change away from settling into marriage and parenthood until later in life, high student loan debt, or even reservations about a home being a wise investment in the wake of what the last recession did to their elders. That said, some have suggested that this group is simply willing to wait longer to buy, thus skipping the entry-level purchase altogether to land in their preferred home.
At the other end of the age and price spectrum, baby boomers are expected to make up nearly one-third of all buyers in 2017.
By and large, this group is not looking to invest in oversized homes, yet we could see improvement in higher price ranges as a hedge against inflation and risk. Shifting wealth away from the stock market into valuable homes may be seen as a safer bet during a transition of power and a period of pronounced change.
What to Expect in 2017
With an economy that shows unemployment at a nine-year low coupled with higher wages, there is confidence as we head into the summer. This is evident with increased open house traffic and multiple bid situations that Realtors® are reporting throughout the Lehigh Valley. Our only hope is that inventory doesn’t dip too low for our selective buyers.
About the Data:
The new Annual Report provides thorough data on the 2016 real estate market in Lehigh and Northampton counties. A school district review for Carbon County is also reported. The research is collected from the Greater Lehigh Valley REALTORS® Multiple Listing Service (MLS), which is utilized by more than 2,500 REALTORS® and Appraisers.