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Old 02-07-2010, 10:20 PM
 
135 posts, read 335,260 times
Reputation: 26

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If you are considering moving to the Lehigh Valley (ABE) then you should be aware of the housing market here. We experienced the housing bubble just like the other area's of the country that had the same thing. The average price of a home in the Lehigh Valley more than doubled from 2002-2008 and now prices are heading the other way.

The average price of a Lehigh Valley home around the year 2000 was somewhere between $90,000 - $100,000. At the time that spending 90-100k would get you a beautiful single family home in a great school district. For around 70 - 85k you could find a row home(double)/townhouse in the same good school district with no problem. In 2008 the average was around $245,000. A rowhome/double townhouse was selling for around $185,000- $200,000 and single family homes were going for the $245,000 or more. If you look at prices of rowhomes in Allentown pre bubble prices were around $40-70k and at the peaking were selling for $150,000. Hello, that's the only wake up call anyone should have needed to realize something is way off base. A nice single family rental property in a good school district was around $550-800 pre bubble then prices were going for $1,000-2,500. Now there are so many properties for rent prices are dropping fast and those prices will be back to pre bubble values soon. I've been watching one close to me that's been trying to rent for 6 months. It stared out asking $1,500 then $1,200 and now it's $900(last 2 months). When it get's to $700 it will be rented. So many people were renting these overpriced rentals but once the lease was over people moved because the found a cheaper deal. Then the property is getting 0 money for a few months. Do that for a few years and it makes better financial sense to have rented it for $750 and keep the tenants for 3 or 4 years steady. It's beginning to happen again and those who waited will be much better off.

Around the late 80's to early 90's the when 78 was done we had a small housing bubble where prices rose around 30-40% but then immediately started to decline and sat stagnate for a few years. Then around the late 90's prices of lehigh valley real estate started rising 4-5% a year which is what nationally was happening. Even at that rate it was too fast too quick. It doesnt take a economist to realize that when housing is rising faster than incomes and inflation your in a bubble. Then came the DOT.COM bubble and the federal government decided to drop interest rates to the lowest in US history and that's what started the insanity of the housing/credit bubble. From around 2002-2008 prices of lehigh valley homes(And a large portion of the US) started watching housing prices increase double digits for the next few years. That created the housing bubble and people simply lost their minds!

Here is a chart that shows all the data collected on housing since data started being tracked.

http://graphics8.nytimes.com/images/...aph2.large.gif

Housing is not an "short term investment" and should never have been viewed as so. When you calculate the cost of ownership over the long run housing has increased less than 1% over the past 115 years.

Those who were not purchasing because the thought "You better buy now or be priced out forever", "They aren't making any more land" etc. were taking the recent on paper interest they thought would keep rising and taking equitity loans to purchase everything the didn't need like new expensive cars, vacations etc. It's the first time in history that you can say we had a "National housing bubble". The cities and locations that experienced the housing bubble increases affected the entire nation. If you look and study what's going on internationally you'll see that many other large nations went through a similar housing bubble and that's why we are globally experienced a disaster. I encourage anyone to look at Japan and see what many are calling "The lost decade" because our countires are very similar in economic factors.

The Lehigh Valley has already witnessed our housing market values drop at minimum 30%(that's what the local realtors are saying I think it's more around 45%) and forclosures are starting to increase at rates never before seen nationally and locally. I visited a sick friends mother in Emmaus this week and on her street alone I counted 3 homes with those wonderful Sheriff's/Foreclosure notices on the door. That's 1 street! Prices more than double during the bubble years and it's not going to stop decreasing more a few more years. When the bottom finally does come I expect prices to be more in line with the mid 90's values. Nobody will ever see the peak value of homes in the Lehigh Valley that happened around 2008(240k) in the century it's just not going to happen. When prices stop dropping they will sit stagnate for at least 5 years or more and then will start rising at less than 1-2% a year and I would guess it's more than .05%-.75% a year at best.

If you look historically at when the citizens of the US were financially doing good it's always been during periods of small price increases in housing which leads to more money in peoples pockets. The people who deny or claim my theory are 99.9% of the time people who have a vested interest in housing prices going up. Those are people who purchased during the insane bubble years or people who make money off housing(used house salesman, mortgage brokers etc).

We have more inventory of housing than any other time in our local history and that doesnt include the "shadow inventory" of homes banks are sitting on in hopes of a return(NOT). Prices of rentals are already coming down because simply put people arent DUMB anymore.

There is a website that's become the biggest website on the net that strictly deals with the housing/credit bubble. It's the #1 site for this information and is updated daily with articles that you probably won't see in our local newspaper because newspapers are bias toward those who pay the bills(Realtors/Real estate is the #1 revenue supplier of newspaper, FACT) and that's why if you notice you only ever get articles about the housing market from local realtors or the realtors economist from Bethlehem. It's like asking a used car salesman if your getting a deal? Would you trust them or do indepedant research? Here is the website I am talking about.

Housing Crash Continues

I've heard every reason possible about the rise in real estate values but nothing makes sense and the old saying still stand true "If if looks like a duck, quacks like a duck, it's a duck". Here is the chart I posted above that shows the "History of housing" tracked over 100+ years. If someone can disprove that chart I would love to hear it. I've never heard anyone come up with any logical reason and never will.

http://graphics8.nytimes.com/images/...aph2.large.gif

Prove history wrong!
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Old 02-10-2010, 06:15 PM
 
61 posts, read 207,793 times
Reputation: 28
patrick dot net is a great site, I check their links nearly every day.
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Old 02-15-2010, 05:54 PM
 
135 posts, read 335,260 times
Reputation: 26
Quote:
Originally Posted by Matt_PSU View Post
patrick dot net is a great site, I check their links nearly every day.

It's a great site that doesnt print lies and 1/2 truths like the local paper around here the morning call. 99% of everything they print about real estate comes from local used house salesman. That's such a joke. Thats no different than asking a car salesman about cars. LOL!

Reading about the local housing market in the morning call is very funny though. There is another website that's basically a blog with comments about the NJ Real Estate bubble:

www.njrereport.com


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Old 03-06-2010, 02:25 PM
 
135 posts, read 335,260 times
Reputation: 26
This is for Dobbs
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Old 01-22-2011, 11:59 PM
 
4,128 posts, read 9,487,128 times
Reputation: 3412
I have been looking at townhouses in Bethlehem and I do see this. I see a lot of propertys that sold in 1998-2006 for around 50-75k, now being listed for 85-125k.

I think the prices are reasonable at the current level, but if it could be had significantly cheaper in a couple years, of course waiting it worth it.
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