This month in our local real estate market we are hearing much of the same: “low inventory,” “high interest rates” and record low transactions. Although this story hasn’t changed much over this year, what typically isn’t focused on is the details, specifically the local markets at an individual level, which is why our Property Pulse articles are unique. Oftentimes, we get the 20,000-foot overview of the Lehigh Valley market and you may think this holds true for all of the valley, but it doesn’t! Toda,y we’re going to break down the month-over-month median values in the Lehigh Valley so we can determine what is happening in our market and how to make sense of what we can see.
General market overviews do not give a full picture.
Why? Let’s look at the month-over-month changes in median home price for all of the Lehigh Valley.
The trend is upward, but the median sales price has come down about 4.5 percent since June… Oh no, that must mean housing prices are crashing, right?!?
Not so fast… Let’s take a look at the local Saucon markets.
This graph paints a very different picture, with Saucon Valley School District home values remaining fairly stable since June and Southern Lehigh’s jumping by 40 percent!
So what is really going on here? Which of these is correct? The answer is…both! What people tend to forget is that there isn’t just a Lehigh Valley housing market. There are markets. And each one of these individual markets is different, with its own effects on the regional housing data. Let’s take a look at these charts combined to give you an idea of that combined effect.
By combining both of these charts, you can see that overall, the Lehigh Valley pricing hasn’t had much volatility, while the Saucon/Southern Lehigh markets have seen significant ups and downs. This might bring more questions such as:
- Why is the Saucon market so volatile?
- What about that 4.5 percent dip in home prices you mentioned earlier?
The answer to both of these questions is completely related to the amount of listings in each area.
- Why is Saucon so volatile?
This is 100 percent directly related to how many homes sell (not necessarily the price) each month. Why?
If only 9 homes sell in Saucon in any given month, but all of the sold homes are over $800,000, is the median price going to go up? Of course, but is this a true representation of what most home values are? No. With the extreme lack of listings, each home that sells has a much greater impact on “market” prices than it normally would, which creates this volatility on a month-to-month basis.
- What about that 4.5 percent drop in home values? Is it housing market crash time yet?
Again, this comes back to homes that sold in the entire Lehigh Valley. So, let’s go back to our chart with the median sales prices, but add in a lower priced market, the Allentown School District.
It’s clear that homes sold in Allentown have the opposite impact on home values in the entire Lehigh Valley, but which districts create more impact?
With Allentown typically having double or more the total number of sold homes per month, their market price has a greater impact on the Lehigh Valley’s median price.
So is it a crash or not?
No! The phenomenon we’re seeing is that there are more homes selling in lower price point areas in the Lehigh Valley, which distorts the data to make it look like an overall decline. This is why I’m stressing the importance of the general market updates. Sure they are good to get an overview, but if you’re truly serious about moving to an area, you need someone that knows that market. So the next time you hear someone say they know the Lehigh Valley housing market better than anyone, you should challenge them by asking a simple question: “Which one?”
What this Means
For Home Buyers
If you’re serious about buying a home and you’ve only been focused on the monthly market updates for the entire Lehigh Valley, you need to get specific. Specific towns, municipalities, school districts, even developments! Real estate is hyperlocal and you need to get a clear direction to be able to know the market.
For Home Owners/Sellers
When you get those monthly emails from past agents or brokers that just have an overview of the entire Lehigh Valley, just know that the information likely isn’t representative of your neighborhood. You need information that’s local to you in order to get the proper perspective.
Again, if you’re looking to buy an investment property and you’re looking at the Lehigh Valley as one market, you’re in for a surprise! Even if you live in the Valley, it doesn’t mean you have a clue what the values are at the opposite end of town.