Business

Real estate market

May 7, 2008

Property transaction slowdown hits county

By Jerry Lynott jlynott@timesleader.com
Business Writer
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WILKES-BARRE – Signs of a national economic slowdown are showing up in Luzerne County as a drop in the number of property transactions, while prices seem less affected. People associated with the real estate business say the sales weakness was inevitable, but the county and state have not been hit as hard as other parts of the United States.

Deeds, mortgages and realty transfer taxes dropped in the first quarter of this year compared to the first three months of 2007, according to data provided by the Luzerne County Recorder of Deeds office.

In most instances the difference is noticeable.

The number of deeds recorded dropped by 402 or 15.2 percent in the year-to-year comparison. Mortgages fell even further, by 784 to 19.1 percent.

The lower number of transactions means properties spend a longer time on the market while prices have come down or flattened out, said Austin Jaffe, Ph.D., director of the Institute for Real Estate Studies at Penn State University and consulting economist for the Pennsylvania Association of Realtors.

“Pennsylvania markets are slowing down just like the national markets have slowed down,” Jaffe said Tuesday.

The state and local market, though they follow the national market, do so less dramatically and less quickly. “Pennsylvania is not as volatile” and there is less speculation, Jaffe explained.

Charles Adonizio, president of Atlas Realty Inc. in Plains Township, noticed the same falloff in transactions. “We’ve all felt it,” he said.

The local market “went through a wonderful five-year stint,” but it is finally freezing up, Adonizio said. “We’ll finish the year down.”

A number of factors are involved, “like your day-to-day needs of food and fuel and also the financial institutions are more rigorous” in issuing loans, added James “Red” O’Brien, county recorder of deeds.

But within the county data, Adonizio pointed to what he said was a sign that the local market’s fall will not be that far.

The local realty transfer tax decreased by $132,974 or 6 percent, while the state tax showed a smaller dip of $47,609 or 2.4 percent. At the same time, the average selling price increased by more than $9,300 to $85,638. The data included commercial and residential properties, so the averages could have been inordinately influenced by large transactions.

Like Jaffe, Adonizio noted there are not the big price swings for residential properties, and there is little speculation and no market bust as occurred in other areas.

“From the average person’s perspective, housing is a necessity” not a luxury, Adonizio said.

First-time home buyers can still apply for a mortgage and chances are they will get one if they have a steady income and good credit.

On the other hand, someone living in a house valued at $200,000 who wants to upgrade to one worth $400,000 might want to reconsider right now, Adonizio suggested.

Signs of a slowdown

Activity in the Luzerne County real estate market has dropped off in the past year based on first-quarter comparisons of 2007 and 2008. It’s representative of what is happening nationwide.

    2007

2008

Change

%

Deeds         

2,628    

2,226

  -402

-15.2

Mortgages

4,099

3,315

-784

-19.1

Local Realty

Transfer Tax*

$2,189,780

$2,056,806

-$132,974

-6.0

PA Realty

Transfer Tax **

$1,953,928

$1,906,319

-$47,609

-2.4

*The Local Realty Transfer Tax is 2 percent of the sale price, except in Kingston, where it is 2.5 percent, and Wilkes-Barre, where it is 3 percent.

** The Pennsylvania Realty Transfer Tax is 1 percent of the sale price.

(Source: Luzerne County Recorder of Deeds)

Like economist Austin Jaffe, Atlas Realty president Charles Adonizio noted there are not the big price swings for residential properties, and there is little speculation and no market bust as occurred in other areas.

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