Tag Archive for: Greater Scranton market

The most important things for homebuyers to consider when purchasing a home are:

  1. Being able to afford a home based upon one’s situation in life
  2. Not over-paying for a home based upon its market value
  3. A home’s location – What do the neighborhoods, school districts and surrounding area look like?
  4. A house’s age and the age of its components

Notice how security is an aspect you can’t ignore with the prospect of purchasing a home. It’s only natural to have hesitation about buying a home as it’s a big investment. Furthermore, feeling a sense of security goes beyond the financial commitments, which are required from buyers as they move forward with their purchase. If you lack security, you’ll be without peace taking another step toward homeownership. It’s also important to note that three of these four considerations listed above directly relate to money.

Tops on the list is paramount, because if your circumstances in life won’t allow it, you can’t or perhaps shouldn’t purchase a home. Home affordability comes in all shapes and sizes. What might be affordable to buyer A, isn’t feasible to buyer B. Being able to afford a home relates to the ability to budget properly for each and every cost associated with the purchase. Your debt-to-income ratio might be the surest way to prove to yourself as well as a lender, you’re able to follow-through with a home purchase. Besides your debt-to-income ratio, you should also reflect upon how much of a mortgage you can afford? You may be approved for borrowing a certain sum, but that doesn’t necessarily mean you should take on that loan. The underwriters who dabble in rating an applicant’s ability to purchase will ultimately examine a buyer’s gross income, outstanding debt, assets and liabilities. They’re going to probe to see what demands have been placed on the buyer’s income. They’ll also forecast, as best they can, to ensure the bank’s ability to get paid back in the future isn’t at risk.

Secondly, buyers and sellers have been more cautious with the drastic increases in home appreciation since the onset of the pandemic. While the pandemic has vanished, home prices continue their upward climb. Since the beginning of COVID, when real estate sales were restricted, home prices have risen 54.8% in the Greater Scranton market.* A market recently named as the most affordable in the country. Again, while there are sales to be had right now, in fact we’re entering a time of the year where homebuyers will discover some of the best premiums around, buyers should exercise prudence. How long do they intend to live in the place they’re thinking about buying? Their offering on a property may not align with its value and might place undue hardship on the homeowner, if they need to sell a few years after their purchase. We would recommend living in a home for at least seven or more years at the risk of taking a loss. Though homes are generally a solid investment, there are no guarantees. If you need the freedom to move at a moment’s notice, within a shorter time frame from when you purchased the home, you might want to refrain from buying until your circumstances change.

For some buyers, a home’s location is the first litmus test it must pass. If the setting isn’t appealing or the property – though it has virtually everything the buyer is looking for – is in a non-ideal section of town or the purchaser has a family/children and thus schools are high on their list, then it’s hard to overlook locale. We would suggest reviewing pros and cons of various listings as it relates to their whereabouts. You can’t change their bearings, so start there and rate how important distances to work, school, daycare and shopping are, for instance. Look into traffic patterns and noise levels in particular parts of town. If school districts are important to you, target homes in the districts you would prefer to live. Scope out the home’s surroundings. Catch a glimpse of the area on the weekends, during the week, day and night. Is the neighborhood kid or pet friendly? Is the home in a walkable community?

Finally, the vast majority of homebuyers aren’t acquiring a new or newer construction home, one that’s less than ten years old. Being that many buyers are moving into a house that has been around the block, we’d certainly recommend a home inspection as a contingency to the purchase. Besides that, over time, a home’s elements begin to display patterns of behavior and likewise, deterioration. What parts of a home should you keep your eyes on? Windows, roof, HVAC (heating/cooling) system, foundation, to name a few, but again, call in the professionals, such as a reputable home inspector. They’re more than capable of assessing the age of a house’s components/appliances. A few decades after the construction of a home, repairs become more common, and thus as a prospective buyer it’s important to understand what your yearly maintenance/repair costs might resemble.

 

* Greater Scranton Board of REALTORS® stats; median homes sales for March 2020, October 2022

There’s more uncertainty in the national real estate market than we’ve seen in some time. We’re two years beyond the onset of COVID and while we’re past many of the main health concerns of the virus, obstacles still remain. Remote work is likely here to stay, thus there are adjustments to housing post pandemic, which continue to unfold and impact the market. Is time running out for sellers to take advantage? Will buyers have a better chance of acquiring real estate being that their purchasing power has somewhat diminished? What’s in store for our market in the Greater Scranton area?

The future of real estate isn’t as dark as some would have you believe. The chance of a housing crash, the likes of 2007-2010, lacks much supporting evidence. In fact, the exact opposite might be true. Many experts are calling for a busy spring market this year and even Zillow projects home appreciation to hover around 9% for 2022. Many of the conditions, which existed prior to the housing bubble, simply aren’t present. When the market began to tank fifteen years ago, there was a surplus in housing inventory, mortgage lending resembled the Wild West and foreclosures occupied their fair share of the market.

Today, the narrative is quite different. There are shortages in markets throughout the country. Here in Northeastern Pennsylvania, our month’s supply of homes continues to unimpress buyers: year-to-date we sit at 1.29.* A magnifying glass would be required if the inventory got any smaller. In the four years, which consisted of the housing bubble, the market was heavily in favor of buyers and saw surpluses of housing between 7.3 and 9.6 month’s supply, according to the National Association of REALTORS®. Furthermore, lending restrictions are much tighter than those that existed fifteen years ago. In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act became law with its eye toward consumer protection and a reform of the lending industry, especially riddance of predatory lenders. In general, those who are approved for a mortgage in 2022 are much more qualified than those approved even a dozen years ago. Finally, negative equity in the national housing industry has reached its lowest level over this same period of time. Much fewer homeowners are underwater than were during the housing bubble.

The future of housing post pandemic is not scary. Actually, 2023 will probably resemble 2019 more than it will last year. Inventory will bounce back, but that might take a year or two. The immediate future for sellers does pose a threat to them receiving top dollar for their investment. “There’s a little insanity in our market right now,” maintains Amy L. Kiesinger Bohenek, an Associate Broker with Realty Network Group. “Listing agents are faced with multiple showings and offers, sometimes over asking price. The appraisal process can be cause for a headache from time-to-time too. When a home doesn’t appraise, where does that leave both parties, especially the seller?” Despite this, the window for bidding wars and high price appreciation is closing. Despite climbing mortgage rates, demand for housing remains strong. Price appreciation will continue to trend up, albeit home prices shouldn’t be in the neighborhood of 18%, like much of last year. Sellers in our region should act sooner than later if they want to take advantage of this market they find themselves firmly entrenched.

Buyers must hang in there if they have a desire to pursue real estate anytime soon. The question remains, how can you sit tight when your purchasing power appears to be vanishing? Homebuyers have seen the average thirty-year fixed mortgage rate increase to roughly 5.3%, which is about 2% higher than it was at the beginning of the year. Many first-time buyers are already struggling to get their foot in the door and compete with others, including investors. Higher rates, for those who require a mortgage, generally mean they’ll have less to contribute toward a monthly payment. That’s why it’s important for buyers to have a plan, stick to a budget and know what they can afford.

In addition to the factors listed above, real estate in Northeastern Pennsylvania continues to have affordability as its ally. Year-to-date, the median home sales price is $179,000 (up 7.7% from the previous year).* New listings are down slightly, but inventory is expected to pick up. The groundwork for homes to appreciate at a slightly slower pace with small improvements in inventory is being laid. With an increase in buyer and seller competition that’s sure to come this spring and summer, being too conservative, will surely impact homeowners thinking about selling.

 

* Greater Scranton Board of REALTORS®