Realtors say it's "an ideal time" to buy a home in Lancaster County, yet sales are down by one-third. Local sellers must become more realistic about pricing, one analyst says.
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It got a lot harder to sell a house here in the past 12 months.
Home sales in Lancaster County dropped by a full third in January compared to the same month last year, Lancaster County Association of Realtors reported this week.
One local analyst thinks he knows why: sellers' reluctance to lower prices.
"My take on the market situation is easy — list prices need to come down," said Jeff R. Geoghan, an agent with Long & Foster Real Estate Inc. who blogs about the county's real estate market at www.LancasterCountyBlog.com.
There were 229 homes sold in the county in January, down 33.4 percent from 344 in the same month a year ago, the Realtors group reported. The average number of homes sold in January during the last five years was 367, according to the organization.
New residential listings in January dipped much less — by 5.2 percent to 746 from 787 in January 2007. The number of new January listings has averaged 683 over the past five years, the group said.
Home sale prices have flattened, but not decreased, the association reported. The average sale price of homes sold in January rose slightly to $187,771, a 0.4 percent increase from January 2007, when homes sold for $187,104.
Jeff Funk, president of the Realtors association, said he expects the market to remain soft well into summer because of the credit crunch caused by the nation's subprime mortgage crisis.
"But a better second half of 2008 is forecasted if loan limits for conventional mortgages increase," Funk said.
Blogger Geoghan also said the pieces are in place for the market to begin a recovery. Banks have kept mortgage rates low and the government's stimulus package includes aggressive changes to Federal Housing Authority programs.
However, the gap between list prices for homes and actual prices paid remains too wide, Geoghan said Friday. That gap grew last winter to more than $58,000 by February 2007, he said. It narrowed to $14,000 in August as the subprime crisis became national news, but then list prices headed up again, while actual sale prices stayed down. The difference between average list price and average sale price reached about $38,000 in December before narrowing to $36,000 in January.
January's data is encouraging, yet "Lancaster County continues to resist a price correction," Geoghan said.
Even if list prices are a bit high, Funk said Lancaster County has weathered the slower market well in terms of maintaining sale prices, and interest rates have come down. He said he is upbeat. "It's still an ideal time to buy a home in Lancaster County, because mortgage rates are great, money is readily available for qualified buyers and buying a home is a sound investment."
The national average rate for a 30-year fixed-rate mortgage was 5.68 percent as of Jan. 31, down from 6.34 percent a year ago, according to Realtors association figures. The average 15-year, fixed-rate mortgage was 5.17 percent, down from 6.06 percent a year ago.
Geoghan agreed that Lancaster County has a solid market, with a stable economy and low unemployment. But, if the gap between list prices and sale prices doesn't narrow, houses will sit unsold, he said.
"No seller wants to stay on the market for three or four months in Lancaster," Geoghan said. "But without expert price advice — among other things — that's what's going to happen."
"If the gap can be narrowed this spring in Lancaster County, I believe we'll see the market move forward."
E-mail: pburns@lnpnews.com