Local Market: The Real Estate Report
"Housing Market Experiences First-Quarter Slowdown"
by Ellen Kline
The real estate market in Centre County is softening. A quick review of first-quarter numbers from 2005, 2006, and 2007 from The Centre County Association of REALTORS Multiple Listing Service (MLS) shows an erosion in units sold of almost 40 in two years. State College-area units are down 29 from 2005 but average sale price has steadily increased from $206,123 in 2005 to $232,222 for the first quarter this year. See the chart below for details.
Although State College is strong on average price, the Centre Region overall average is down by about $5,100 compared to 2006.
Bellefonte sales were about 18 units higher last year than this; however the average sale price is up to $188,472 from $180,494. There are many new-construction properties available in several developments in the $300,000-plus range.
The overall volume of Centre County sales for the first quarter is down $6 million from 2006 and $2 million from 2005, the years of the peak market for the current cycle. Mortgage rates are still favorable but many non-traditional avenues of lending are getting harder to access, or are being eliminated. Sub-prime lending, which is the segment that caters to lowincome, poor-creditrated consumers or higher-risk projects is under scrutiny and no longer readily available.
Number of Residential Listings sold January 1-March 31, 2007, and those sold during the same time in 2006 for all of Centre County. Derived from Multiple Listing Service reports.
| 2007 | 2006 | |
|---|---|---|
| $50,000-$99,999 | 33 | 34 |
| $100,000-$149,999 | 55 | 54 |
| $150,000-$199,999 | 60 | 75 |
| $200,000-$249,999 | 32 | 42 |
| $250,000-$299,999 | 30 | 26 |
| $300,000-$349,999 | 14 | 14 |
| $350,000-$399,999 | 5 | 10 |
| $400,000-$499,999 | 3 | 5 |
| $500,000-up | 5 | 5 |
Many property flippers and speculators are sitting on inventory they cannot sell to free up debt, and are watching their bargaining power erode. Move-up buyers cannot count on their current homes selling for top dollar or at all, so many are staying put rather than risk having two mortgages. Buyers are in more control now than they have been in years, with a few exceptions.
The most active price range is between $100,000 to $200,000, and that is a range where sellers rule if the property is in good condition and priced right, particularly in State College. There are still multiple offers and fast sales in this category.
Sellers with properties of more than $500,000 are having the toughest time getting sales. In 2005, 30 were sold in the first quarter, this year only five. There are 71 properties currently for sale in this range, meaning we have more than 42 months’ worth of inventory available at our current rate of sales. This is the best area now for a buyer to secure a dream property if they are in a position of not having to sell their current home for funds, or have a property under $200,000 in State College to sell.
Our total outlook is not grim, but 40 units down on an average of 1,500 units a year is a cause for concern if it continues on the same percentage basis each quarter throughout the year. The first half of a year is when the most properties are sold here traditionally. ◊
Ellen Kline, ABR, CRS, GRI, is a REALTOR with Re/Max Centre Realty. She is past president of CCAR and an instructor in the real estate department at Penn State. You can contact her at ellenkline@aol.com.