Loss of Tax Credit Means Dip in Home Sale Prices

In an effort to explain why there was a 10 percent decrease in real estate
prices in Bethlehem so far this year, D. Brad Patt spoke to the average
person and compared the current real estate market to basketball.

Last year, with federal tax credits, it was like playing ball with a big,
oversized rim that allowed a team to roll up the points on almost every
shot, he said.

But this year the rim is back to normal size and its harder to score.

The upbeat senior vice president of  Prudential Patt, White Real Estate and
The Premier Group in Allentown isn’t accustomed to talking about a slow
market. But that is his task these days.

“This year is a normal, non tax credit market,’’ Patt said. “Last year, the
government was giving tax credits.“

The tax credits, started in 2009, were aimed by the federal government at
correcting the worst real estate market since the Great Depression.. They
had allowed credits up to $8,00 for first time home buyers and $6,500
credits to current home owners purchasing a new or existing homes.

Indeed, Lehigh Valley sales were reported down 24 percent in May to 432
compared to a year ago, according to the Lehigh Valley Board of Realtors on
June 20. But compared to April, sales were up 29.3 percent from 334.

The median (the midpoint of the prices) sales price was $164,000, down from
$175,00 last year. And the average property is on the market 86 days,
compared to 76 in May 2010.

So when homeowners compare values between this year and 2010, it’s back to
normal.

The incentive is gone.

Patt is one of a few real estate people in the Lehigh Valley who has a
statistical hand on all sectors of the Lehigh Valley with the Prudential
Patt, White Home Expert Report.

It showed Bethlehem's prices decreasing, with the median price sold per
property down 10.31 percent between May 2010 and May 31, 2011, the study
said. The median selling price of a home in Bethlehem was $157,000 this
May, compared to $158,700 a year ago.

There were 623 houses were listed for sale this May, compared to 519 a year
before. Fifty five houses were sold this May, and 66 a year ago.

“Readers should keep in mind in most areas, new business under contracts
has not yet settled is up strongly,” Patt said, “which is the element of
comparing last year’s tax credit business vs. this year’s standard
business.”

Craig Scharadin a Realtor with the Frederick Group in South Whitehall
Township has sold houses in the boroughs, towns and cities in the Lehigh
Valley since the 1970s.

He said he’s never seen such  a strange market as this one. But he keeps
plugging away, as he teaches the young sales associates to do. Emmaus and
Parkland school districts are still No. 1 and No. 2 where people are
interested.

“It seems to me that we’re doing a little better this year,” he said. “Were
not booming, but we‘re better. I‘m banging on the bottom.”

Realtor Larry Ginsburg, president of Prudential Regency Real Estate in
Allentown, has been involved in the business throughout the area for 39
years.

“Those selling their homes need to price them properly,“ he said. “We need
to get the foreclosures and short sales out or our system. And the
unemployment rate, near 9 percent, isn’t any good.’’

Ginsburg said he feels for the young people entering the business.
“There are about 432 sales per month in the Lehigh Valley,’’ he said. “And
there are 2,000 Realtors.”