http://www.pennlive.com/midstate/ind...s_reaches.html
Decline in home sales reaches midstate
by DAN MILLER, Of The Patriot-News
Friday April 11, 2008, 12:01 AM
The Associated Press
Foundations for new homes are seen in the foreground in January as construction of new homes fell in 2007 by the largest amount in 27 years.
The nationwide housing slowdown that took hold in 2007 might be showing up in the midstate, but statistics present a picture that's not easy to interpret.
In the first quarter of 2008, the number of homes sold dropped 21.6 percent from the first quarter of 2007. It was the lowest first quarter for home sales since 2003. And for the first time since the national slowdown took hold last year, the average price of a midstate home sale has dropped, by 1.2 percent compared with the first quarter of 2007.
What makes the numbers confusing, however, is that the median price -- the midrange of the highest and lowest prices -- rose by 3 percent compared with the first three months of 2007.
These numbers come from the Central Penn Multi-List, which tracks housing sales. The organization says 1,453 homes were sold in Cumberland, Dauphin, Perry and northern York counties.
In late 2006, Ryan Sweet, an associate economist with Moody's Economy.com, predicted housing prices wouldn't fall in the Harrisburg area. Since then, economic conditions across the nation have gotten worse than experts anticipated.
"The Harrisburg housing market is in the midst of a correction. The labor market in Harrisburg is slowing, and job growth is on the verge of stalling," Sweet said.
Those factors, coupled with tighter lending standards nationwide, mean "demand has fallen more than what we expected," he said.
"You will see prices decline."
Sellers and buyers have changed their attitude in recent months, said Frederick Briggs, a manager and associate broker of Prudential Thompson Wood Real Estate in Hampden Twp.
"Sellers were believing the market was the same as a year or two ago, and buyers were wondering why there was no change in price. Now, sellers are starting to recognize they've got to be more realistic in their price, and buyers aren't going to be able to steal," Briggs said. "There has to be some negotiating process. We believe it's coming very close to where the market value really is."
Homes took longer to sell in the midstate in the first quarter, continuing a gradual trend that began last year. The average length of time to sell a home after it was listed -- market days -- grew to 74, a level not seen consistently here since 2002.
The average price fell to $182,028, a 1.2 percent decline compared with the same period in 2007. In past years, the report has used the average price as an indicator of the housing market's health.
The numbers offer one bright spot for sellers. The median price for homes sold in the midstate -- $164,870 -- was 3 percent higher than in the first quarter of 2007.
Nationwide, the average price of $241,900 for an existing home sold in February was down 7 percent from a year ago, according to the National Association of Realtors. The national median sales price was $195,900, an 8.2 percent drop from February 2007. The association doesn't have full data for the first quarter of 2008 available.
The national association typically places greater emphasis on the median price, but the median and average prices are typically similar, said Walt Molony, a spokesman.
Considering falling sale prices in other areas of the country, "I am pleased that prices in the south-central Pennsylvania area are holding steady," said Kay Hock, the president of the Greater Harrisburg Association of Realtors, which owns the Central Penn Multi-List.
Hock and other observers acknowledge tighter lending standards as a factor in slowing conditions here, but not a big one. Credit tightening has probably reduced the number of first-time buyers who can qualify for homes, Hock said.
The bigger factor appears to be an oversupply of housing on the market. This puts downward pressure on housing prices because sellers face more competition.
Peter Gorski, a Hampden Twp. investor who buys homes from people who are facing foreclosure or want to get out for one reason or another, estimated that about 4,900 homes are on the market in Cumberland County -- almost double the number of a year ago.
In some cases, sellers are setting their prices below what they might have received previously in an attempt to avoid the haggling now seen as inevitable.
Jim Deitrick and his wife, Kerry, made improvements over the nine years they've lived in their 1,600-square-foot home near Central Dauphin High School. The house was freshly painted to go with hardwood floors, a new kitchen and lighting fixtures. The couple didn't have to sell but wanted more space for their three children.
Jim Deitrick said the house, sitting on two-thirds of an acre, sold at the listed price in "the mid-200s" within three days. "My thought was if I go with a higher price, I will probably end up negotiating down," he said. The couple are to settle in May on a new, 3,000-square-foot home in Lower Paxton Twp.
A house selling in three days isn't the norm now, said Kathy Sumski, the Deitricks' real estate agent with RE/MAX Realty Professionals. She said the key was the house's good condition and its price compared with those of similar homes on the market.
"You can't have that fluff range we used to have. You have to price it on the money," Sumski said.
Eventually, as excess inventory gets bought up and fewer homes are on the market, the downward pressure will ease, and prices will begin to rise, Hock said.
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