In my last column I “suggested” that the Pocono real estate market was beginning to stabilize, in this column, I am guaranteeing it.
It is easy as a professional to look back at market data and say, here’s what happened. It takes insight, instinct, and knowledge of the big picture to take a position on what is going to occur. It takes a crystal ball. Using a crystal ball would be easier since we have not been here before. By that I mean, we cannot look back at a period of time that has the characteristics of the overall market economy such as our current one.
When formulating an opinion on the market, we have an extraordinary amount of historical market data to take into consideration on a microeconomic (local) level. When we combine the local data with the macroeconomic data, we can have our crystal ball.
First, the one dynamic that I need to clearly see in the data is a “market trend”. Since the market fluctuates every day, I review 2-3 quarters of information, before I will communicate a trend and direction.
Second, I look at supply and demand (homes on the market and homes sold) and future demand, (homes that have closed). I also trend the average sales price and foreclosure activity. When the average sales price levels out, buyers have told us what they are willing to pay for our home(s)/product(s). I can then gauge what is going to happen with the non-foreclosure homes for sale by watching this ratio in relation to the amount of foreclosures that are selling. When foreclosure activity increases, the average homes on the market see a decline in activity and sales price, visa versa.
Third, our market depends heavily on NY & NJ markets. A large portion of our buyers cannot buy here, because they cannot sell there. When these markets begin to recover, we will be 6-9 months behind them (market trend).
Fourth, from a macroeconomic point of view, our industry is affected by overall consumer confidence (CC). Routed into CC is our view on our present economic conditions and overall economic expectations. This view is constructed by our concerns over jobs, savings, war, oil prices, etc. When our confidence is up, we invest, and the reverse is true.
In closing, the overall amount of homes on our market are remaining low, sales are finding the bottom, and future sales are increasing when compared to this time last year. NY & NJ appears to be seeing activity that it has not witnessed in years, and Consumer Confidence has been recovering since earlier this year. As the market seeks it “hard bottom”, it will rise, fall, rise, and fall. In my opinion, we will see this “bouncing” at the bottom for the next 8-16 months due to our seasonality, before we see anything that resembles a recovery. Better to be bouncing then to be free falling with no bottom in sight.
Written by Dominick J. Sacci is Senior Vice President and General Manager for Better Homes and Gardens Real Estate Wilkins & Associates. Mr. Sacci has been tracking market statistics for the last nine years. Market data was compiled from the Pocono Mountain Association of Realtors MLS system. Readers can discuss the residential real estate market with Mr. Sacci at www.pbjonline.com/blog. A reprint from Pocono Business Journal