Lehigh Valley home buyers had a tough 2023. Five takeaways from the past year.
It was a perfect storm for Lehigh Valley homebuyers in 2023.
Rising interest rates and sales prices along with a lack of inventory made it challenging for anyone looking to move, according to the Greater Lehigh Valley Realtors’ annual report, released Tuesday.
“Housing affordability remained a top concern for homebuyers, and for good reason: Mortgage payments are up significantly from 2022, with a number of homeowners now spending more than 30% of their income on their monthly payment,” the GLVR said. “As a result, sales of previously owned homes remained sluggish throughout the year, while the shortage of existing-home inventory helped sales of new residential homes steadily increase from last year.”
However, there may be some room for optimism in 2024.
Here are five takeaways from the report:
Prices continue upward trend
Home prices were up compared to last year. The overall average sales price was up 7.7% to $360,820. By comparison, that price was $234,000 in 2019, before the COVID pandemic.
Broken down, single family home prices were up 5.9% over the year, while condominium prices were up 11.6%.
The median sales prices in the Lehigh Valley was $317,000, an increase of 8.2%. The median sales price is the one at the middle of the Valley’s prices when arranged from lowest to highest, while the average price is calculated by adding all the sales prices and dividing it by the number of properties sold.
Nationally, the median single-family, existing-home price grew 3.5% to $391,700 in the third quarter of 2023, according to the National Association of Realtors. In the prior quarter, the year-over-year national median price increased 2.2%.
“Homeowners have benefited from housing wealth accumulation. However, many homebuyers have been shocked at high housing costs, with a typical monthly mortgage payment rising from $1,000 three years ago to more than $2,000 last year,” NAR Chief Economist Lawrence Yun said. “This doubling in housing costs for recent home buyers is not included in the official consumer price index inflation calculations and contributes to the sense of dissatisfaction about the economy.”
Among Lehigh Valley school districts, Southern Lehigh saw the highest increase at 20.2% with a median sales price of $538,000.
A telling statistic was that the percentage of list prices received was 101.3%, which means it’s still a sellers’ market, but it was down 0.7% over the year. That number means that most buyers are still purchasing homes above the list price.
Sales were down, by a lot
Pending sales in the Lehigh Valley were down 15.5% in 2023, finishing the year at 6,291.
It’s down about 2,500 from the hot market of 2021.
Every school district in the Valley saw its numbers go down, ranging from negative 2.4% in the Whitehall-Coplay School District to a 31% drop in Wilson.
Closed sales were down 19.7%, to 6,193 over the year.
In this category, Whitehall-Coplay was the only district with an increase, posting 5.7%. Northwestern Lehigh was down 35.3%.
Listings took a beating, too
How competitive was the housing market in 2023? Those looking to buy were finding a limited amount to choose from.
The number of homes available for sale was down 30.3% with 488 active listings at the end of the year. New listings were down 19.6% to finish the year at 7,191.
Single-family homes were on the market an average of 20 days at the end of 2023, while townhome/condos had an average of 18 days. Both are slight increases from the end of 2022.
Foreclosures were up, but not much
The number of homes under foreclosure or short sale was up about 1%.
That was about 59 of 6,193 closed home sales for the year. This is an increase of 27 properties over 2022, which saw 32 distressed sales.
“Foreclosure and short sale activity was expected to increase in 2023, and that proved true, but this activity was still a small percentage of the Lehigh Valley market,” the GLVR said. “Through strong gains in equity seen by most homeowners in the last few years, the number of distressed sales has remained limited.”
Looking ahead, sales will go up
Since the fall, real estate experts have predicted an uptick in home sales in 2024, and they are sticking with that prediction. The Federal Reserve says it is likely done raising interest rates and could make as many as three cuts this year.
“Mortgage rates have been dropping in recent months, which should help bring buyers and sellers back to the market and could lead to an uptick in both home sales and housing supply,” the GLVR said. “Affordability will still prove challenging for many homebuyers, however, and economists predict U.S. home sales will remain down compared to 2019-2022.”
What’s not clear is what will happen with prices, which has divided opinions. Some analysts expect them to hold steady or keep rising, while others foresee a drop, depending on the market.
“Sales were restrained due to limited inventory,” the NAR’s Yun said. “But increased homebuilding, along with lower mortgage rates, will not only improve housing affordability but also help bring more homes onto the market in 2024.”