"It's a lot of communication, negotiation and education,"
said Brad Patt, senior vice president and regional manager of Prudential Patt,
White Real Estate. Patt's firm has about 300 agents.
(Rich Schultz/Special to The Morning Call)
The Lehigh Valley housing market is
still searching for bottom, which means the job of helping people buy and sell
homes will continue to be much more challenging than it was just a few years
ago.
When the market was roaring earlier this decade, sales agents were merely
order-takers. They could put a house on the market, wait for the phone to
ring, and the biggest challenge was keeping up with the competing offers to
make sure the seller could pick the best one.
Today, agents compete for a shrinking number of sales and they have to stretch
their creativity to market homes. Prospective sales are also more likely to
fall through due to problems getting final mortgage approval or a buyer
backing out when a home inspection finds a faulty roof or furnace, local
agents say.
So the job requires more finesse and crisis management to see deals through to
closing. And sellers' agents offer such things as free vacations or higher
commissions for buyers' agents to lure interest.
But the changes brokers need to make are more of a
back-to-basics adjustment than an industry-wide reinvention, brokers say.
Brad Patt, senior vice president of Prudential Patt, White Real Estate, said
agents have to make sure sellers are realistic about their price and buyers
are realistic about their expectations when buying a home that is not new
construction. Agents also have to be vigilant about reviewing mortgage
information to determine if offers are likely to go through.
"It's a lot of communication, negotiation and education," said Patt, whose
firm has about 300 agents. "The most important thing right now is for the
agent to get back to basics."
They face a challenging environment.
Lehigh Valley home prices fell in 2008 for the second straight year. The
average price for an existing home in the Lehigh Valley was $222,000, down 2.2
percent from the 2007 average of $227,000, according to the Lehigh Valley
Association of Realtors.
But for the brokers in the field, who make money when homes sell, even more
distressing than marginal price erosion is plunging sales volume. There were
5,632 home sales reported in 2008, down 22.1 percent from the number of sales
in 2007. And home-building continues to spiral downward. There were 1,635
single-home building permits issued in the Lehigh Valley in 2008, down more
than 60 percent from the 2005 building boom when 4,329 permits were issued,
according to U.S. Census data.
Rosemary Scardina, chief executive officer of the Lehigh Valley Association of
Realtors, said it is still a favorable market to previous downturns, when high
mortgage interest rates shut out many buyers.
"In this market, we have an exceptional buyers market with interest rates
extremely low," she said.
Agents have adjusted their marketing techniques, she said. Many offer video
tours of properties, which allows prospective buyers anywhere to take a
virtual tour of the home. And some agents are working with auctioneers as that
method of selling increases in popularity, Scardina said.
"Agents who work with sellers will add things to their repertoire that will
help their seller," she said. "They will advise their sellers on extra things
they can do, like staging or video tours."
The association has 2,300 members, down about 100 from a year ago, Scardina
said.
Economists predict local housing prices will continue to fall, and prices are
likely to stagnate for years before they begin ticking upward.
Lehigh Valley home prices increased rapidly earlier this decade, with several
years of double-digit gains.
From 2001 to their peak year in 2006, home prices soared 68 percent to an
average $228,000. Free-flowing credit that allowed people to buy homes with
little or no money down and speculation from those looking to buy homes and
quickly sell them for profits fueled the upward run.
But today forces are pushing prices in the other direction. Unemployment is
climbing to its highest levels in years and consumer confidence is at record
lows. Credit is tougher to obtain, which shuts out prospective buyers. And
some buyers able to get loans could be sitting on the sidelines, reluctant to
invest in a declining market or at a time when most job sectors are getting
slammed by layoffs.
The Lehigh Valley, however, is in better shape than other areas of the nation,
such as cities in California and Florida where home prices have plummeted
after a much steeper rise. But it still stands in contrast to the go-go run of
a few years ago.
Loren Keim, president of Century 21 Keim Realtors in Allentown, said the new
market is a wake-up call for new brokers, who haven't faced a tight market.
"A lot of brokers who got into the business in the past seven or eight years
have never been through a downturn," said Keim, whose firm has 85 agents. "You
have to be able to help people get their thinking into alignment. Owners need
to know prices are not where they were two years ago. And sellers, you have to
get them to realize they can't offer half the list price and expect to get the
house."
spencer.soper@mcall.com
610-820-6694
