Lehigh Valley housing prices leveling off

The Lehigh Valley real estate market will stabilize this year, but it will take about three years for prices to begin climbing again due to an abundance of homes on the market that will take a long time to sell.

That was the prediction Monday of Loren Keim, president of Century 21 Keim Realtors in Allentown and a featured speaker at the Real Estate Today program hosted by the Murray H. Goodman Center for Real Estate Studies at Lehigh University.

''I believe we'll start to see a stabilization this year, not an improvement,'' Keim said. ''It's going to be a bumpy ride, but the final phase of the housing slide.''

The Lehigh Valley housing market began deteriorating in 2007, with prices dipping on sluggish sales following years of strong sales and double-digit gains earlier in the decade.

The trend continued in March, when the median sale price of a home in Lehigh and Northampton counties was $185,000, according to the HomExpertMarket Report by Prudential Patt, White Real Estate. That's down 1.6 percent from March 2008.

There were 343 homes sold in March, down about 28 percent from the same month a year ago, according to the report. Despite the slide, the Valley's housing market has been holding up better than national averages. And there have been some recent signs of improvement, including a drop in overall housing inventory.

Keim said there remains a disconnect between buyers and sellers that has hamstrung the market. Many sellers still think their homes are worth a fortune, and many buyers think they can get them for half the listing price, he said.

Also hurting the market are prospective buyers who are reluctant to enter a deteriorating market, he said. That pent-up demand is what will help the market stabilize as those consumers take advantage of low interest rates and an $8,000 tax credit for first-time home buyers, he said.

''Buyers are on the sidelines waiting for the right time to buy, but there are a lot of reasons to buy right now,'' Keim said.

Homes in the $150,000 to $250,000 price range will continue to be the strongest sellers in the local market, while those priced at more than $500,000 will face the most difficulty finding buyers, Keim said.

Weighing down the housing market both locally and nationally are rising unemployment, weak consumer confidence and tighter lending standards, which can limit the number of buyers in the marketplace. Foreclosures are also on the rise.

Mary Lorah, a mortgage broker with KNBT, said distressed sales –– both foreclosures and short-sales where the lender agrees to sell the home for less than what is owed, will reduce values in neighborhoods.

Newly built homes where buyers paid a premium are most likely to see a steep price slide, she said, similar to buying a new car that depreciates when you drive it off the lot.

''People haven't even moved into the house, and we're telling them it's not worth what they built it for,'' Lorah said.

The panel briefly discussed what the soon-to-open Sands Casino Resort Bethlehem will mean for the local real estate market. Panelists did not expect it to make a big difference for the region.

However, Stephen Thode, a Lehigh finance professor and director of the Goodman Center, said the casino could boost the residential real estate market in south Bethlehem as employees look to find housing close to their new jobs.

''Most of the casino jobs will not be high-paying jobs; they'll be service jobs,'' he said. ''You're not going to travel 30 miles for a $10- an-hour job.''

Lehigh Valley housing prices leveling off

Real estate sales aren't expected to fall but could take a few years to climb.