Lehigh Valley home sales rose 9.5 percent in December

Experts say the housing market is healing.

The battered Lehigh Valley housing market ended 2011 on an uptick.

Sales last month rose near 10 percent compared with December 2010, marking six straight months that sales exceeded prior-year levels, according to a report released Monday from the Lehigh Valley Association of Realtors.

The latest figures have prompted some observers to conclude that the housing market, while hardly robust, is healing.

“Compared to where we were going, which was straight down, this looks like a great respite,” Bethlehem-based economist Kamran Afshar said.

The region reported 391 sales in December, up 9.5 percent from 357 in the year-ago period. For the whole year, sales fell 5.2 percent compared with 2010.

Comparisons with the prior year are choppy because sales soared in spring 2010 only to plummet after June once a government tax credit expired. With that credit long gone, analysts say it is easier to chart progress.

Loren Keim, president of Century 21 Realtors in Allentown, said volume is moving steadily even though winter normally chills sales.

Keim said he believes historically low interest rates — currently about 3.9 percent on a 30-year mortgage — are enticing buyers. Mild weather hasn’t hurt either, he added.

“We’re actually pretty busy the last four or five weeks,” Keim said. “The winter season is usually terrible.”

Trends on prices are mixed.

An average home in the Lehigh Valley sold for $193,000 last month, down 4.9 percent from $203,000 in December 2010. Comparing month to month, the average price rose 6 percent from $183,000 in November.

Keim said much activity is influenced by investors scooping bargains. He estimated 23 percent of sales involved distressed properties, including foreclosures and short sales. Such anomalies are holding prices down, he said.

But Keim expects fewer additional foreclosures to hit the market, noting that the amount of people delinquent on mortgage payments for more than 90 days is dropping. That bodes well for the long term, he said.

“I think we are going to see a better 2012,” said Keim, also an author who lectures at Lehigh University. “I don’t see a spectacular year but it will be better than 2011 or 2010. There are pretty solid trends when you look at what’s happening with the numbers.”

The local housing market, like much of the nation, has struggled to unwind the excess of the prior decade’s housing bubble. Years of booming construction and soaring prices ended by 2007.

The subsequent recession increased joblessness while credit tightened, further depressing sales.

Recent national data suggest home ownership has lost some luster. Apartment construction is rising as more individuals opt to rent.

LVAR CEO Ryan Conrad said the group believes continued low rates will make home ownership more attractive than renting. Mortgage rates can be locked whereas rents have begun to increase, he said.

In New Jersey, Warren County Board of Realtors President John Kruk said some buyers remain hesitant because they are unsure if interest rates have bottomed.

“Right now, people have no incentive to rush,” said Kruk, an Allamuchy Township-based real estate agent with ReMax. “Once the rates start creeping up, people are going to jump in.”

Sales are still far below boom times. The region reported 4,993 sales last year compared with more than 9,000 in 2005.

Afshar said the bubble era is best forgotten because it created unrealistic expectations. He expects housing to slowly return to normal as excess supply is taken off the market and the broader economy recovers.

“The dive is gone; we stopped going down like a kitchen sink,” Afshar said. “I think this year we are going to see the market consolidate and maybe even some upward ticks. It’s an election year, so a lot of things can happen.”