ARE YOU READY FOR SOME GOOD NEWS?

This is the time of year we typically take stock of what we have accomplished over the last 12 months, and speculate on what the coming year will bring.  According to Dr. Austin Jaffee, the chair of the Department of Insurance and Real Estate at Penn State, the Pennsylvania real estate market in 2010 fared better than in 2009.  2010 was not, of course, a record-breaking year, but it would appear we are headed in the right direction. “House prices hit a bottom early in the year”, said Jaffee in an interview with the Pennsylvania Association of Realtors, “and began moderate increases in many regions due to the tax credit.”  With the tax credit incentive ending in April, there was a downward pressure on prices.  Dr. Jaffee further reported that sales activity was on a roller coaster, largely due to the tax credit, with sales decreasing in the beginning of the year, dramatically increasing in the spring, and dramatically decreasing in the second half of the year.

“Foreclosures continue to be an issue”, stated Jaffee.  While Pennsylvania has fewer foreclosures than other states, legal and technical issues “seem to be slowing the entire market.”  Rising delinquencies and defaults in Pennsylvania are the result of “rising and persistent unemployment.”  Dr. Jaffee explained that interest rates and affordability are quite favorable, but misleading in this downturn and not sufficient to stabilize the market.  For that we need “economic growth and a reduction in unemployment.”

Wait – I did say something about good news, right?  In 2010 Jaffee observed improvements in the housing market due to “better expectations about the market and prices.”  “There is less volatility in defaults and distressed properties in Pennsylvania.  2010 did show improvements with the stabilization of prices and beginnings of increased employment that will lead to an improving real estate market.”  Okay, we had to wade through some less than ideal details to get to it, but let’s concentrate on the “improving real estate market”.  We made it through 2010, and can at least have guarded optimism about a better 2011 for the local real estate market.