Home sales in Pennsylvania are slowing as the impact of the credit crisis with growing job losses and tighter consumer spending sends Pennsylvania housing prices lower. Pennsylvania had been one of those rare places in the national real estate crisis to hold its own.
Between 2001 and 2006 home prices climbed 54% on average in Pennsylvania, and with the fall out of the credit crisis hitting the majority of the country Pennsylvania markets should brace for a deflationary storm in 2009.
Allentown rode a wave of prosperity and wealth buoyed by a booming real estate market and growth. Unemployment was at record lows, and a casino resort was built on the former site of Bethlehem Steel's factory. But now as home sales turn sluggish the market is in the early stages of going significantly lower.
As the local economy weakens and unemployment increases, the Allentown area of Lehigh Valley is beginning to feel the impact of the nation's credit crunch. The construction outlook remains weak as builders try to sell lots in undeveloped subdivisions. Foreclosures are rising. Allentown is forecast to see average home prices deflate 11.3% in 2009.
 |
| City |
Forecast |
| Allentown |
− 11.3% |
| Philadelphia |
− 9.4% |
| Pittsburgh |
− 10.3% |
| Lancaster |
− 7.3% |
In Philadelphia, the eight county metropolitan areas that make up the Philadelphia metro complex the housing market has held up better than most. But growing sluggishness in home sales are sending prices lower. The fall out is projected to last into 2009 by Housing Predictor analysts, who forecast Philadelphia home prices to deflate 9.4% for the year, still much better than the national deflationary average of 12.5%.
Foreclosure rates are some of the lowest in the country, but as unemployment rises so will foreclosures.
Housing sales in Pittsburg are plunging as consumer confidence weakens. The declining number of sales shows that Pittsburg is not immune from fall out of the credit crunch. Pittsburgh has a growing foreclosure epidemic and many neighborhoods are seeing foreclosures listed as much as 40 to 50% below what neighbors bought their homes for just a few years ago, hurting the marketplace.
However, Pittsburgh's older population tends not to move as often as younger people, indicating that the market has some long term stabilizing factors that should protect the community from long lasting housing deflation. The average price of a home in Pittsburg is forecast to deflate 10.3% in 2009.
More homeowners are unable to make mortgage payments in Lancaster as unemployment rises, and adjustable rate mortgages readjust to higher payments. Home sales are in the doldrums, dropping by nearly a third. Prices are also deflating and are forecast to deflate 7.3% by Housing Predictor in 2009.
The positive aspect for buyers in Lancaster is that homes are becoming more affordable, despite increasing foreclosures.
