Lehigh Valley home prices decline but experts see signs of bottom

Home prices declined in the Lehigh Valley during April, though some experts see signs of a bottom in the real estate market.

Average and median prices both fell last month, according to a report released Monday by the Lehigh Valley Association of Realtors.

The region also reported its third straight monthly increase in home sales, which usually peak in spring and summer. Sales in the Lehigh Valley still remain below prior year levels.

"We're currently running at 1997 levels in terms of home sales, which is not very good," said Loren Keim, president of Century 21 Keim Realtors in Allentown. "But I think we are stabilizing."

Keim, who also provides analysis for Lehigh University, said he does not expect recovery until at least 2010. But he sees rays of hope for a housing sector that began sliding three years ago.

Asked if the market has bottomed, Keim replied: "We've got to be at the end or real close."

The region sold 406 homes last month, according to LVAR, up 22.1 percent from the March clip of 335 sales.

But that's still down 18.1 percent from 496 sales in April 2008. Year to date, sales are down 20.9 percent compared with last year.

Sellers meanwhile reduced their requirements in April. The average price in the Lehigh Valley declined 13.5 percent last month to $198,000, down from $229,000 in April 2008.

Kamran Afshar, a Bethlehem-based economist who follows local trends, said he expects further correction before the market recovers.

"We are not yet there," Afshar said. "My guess is until average prices come down to around $160,000, we will not be at equilibrium."

Afshar added that average prices were at $160,000 as recently as 2003, when the housing boom was taking off.

"The bubble was the anomaly, not the current price adjustment," he said.

Median prices also slipped in April.

The median clip -- the point at which an equal number sell for above and below -- fell 8.6 percent last month to $180,000, compared with $197,000 in April 2008.

Many experts consider the median a better barometer than average prices, which can be distorted by high or low extremes.

Looking ahead, LVAR CEO Rosemary Scardina is optimistic about recovery. She expects more progress in the coming months.

"I think sellers have come to realize the market has stabilized," Scardina said.

More buyers, who are being enticed by federal tax incentives and historically low interest rates, will enter the market as the economy improves, she said.

"I think we are going to see consumer confidence come up as unemployment comes down," Scardina said. "Here in the Lehigh Valley, we are a lot more fortunate than the rest of the country."

Other signs in the report indicate the housing slump may be bottoming but not yet recovering.

The amount of time it takes to sell a home appears to be peaking.

In April, the average home lasted on the market 86 days, down from 87 days in March. Last month's total is still up 22.9 percent from 70 days in April 2008.

Pending sales -- an indicator of future activity -- rose for the fourth straight month to 472 in April. But that's down 19.5 percent from 586 pending in April 2008.