Town By Town: In Pottstown, plenty of sellers, few buyers

One in a continuing series spotlighting real estate markets in the region's communities.

Trends in local housing supply and demand aren't working in Pottstown's favor right now. In a word, the market is troubled.

Andrew Himes, an agent with Berkshire Hathaway Home Services Fox & Roach Realtors in Collegeville, said the borough "is one of the few places that hasn't made any kind of a comeback."

Though just about every market in the eight-county Philadelphia region has a shortage of supply, Pottstown's problem is it has 300 houses for sale and very little demand, Himes says.

"Sales average 20 a month, meaning that there is a 14-month supply," he says, with almost half the listings under $100,000.

Contrast that with the growth in surrounding towns, and "Pottstown just isn't a desirable place to be," Himes says.

Says Beth Miller of Weichert Realtors in Collegeville: "We are coming up from a depressed market, and Pottstown will be in the last wave, at the tail end of the recovery."

She adds that "taxes are ridiculous for the prices of the houses."

Ron Minges of Re/Max Services in Collegeville agrees, noting, "There is a really nice townhouse for sale that is just 20 years old, but the taxes are $5,000 a year on a $90,000 listing."

Recently, Miller says, there has been more activity, with 37 pending sales at June's end, and most of the houses selling in under six months, compared with a "five- to six-month normal market." Thirteen of those houses were on the market for more than six months, she says.

Ninety percent of the houses in Pottstown - mostly rowhouses and some single-family detached houses built when the borough was a booming factory town producing iron and steel, nails, textiles, bricks, and silk - sell for under $200,000.

BHHS Fox & Roach Realtors HomExpert Market Report shows average prices there falling 8.4 percent to $92,639 in the second quarter from $101,175 in second quarter 2013.

The median price is down almost 24 percent from 2010, one of the worst years of the real estate downturn, HomExpert's data show.

Surrounding towns in Montgomery and Chester Counties (many of which have Pottstown mailing addresses) have had a good deal of new-home construction. There has been little in the borough, which is not undergoing a restaurant-propelled commercial revival like Ambler and Phoenixville, which have similar industrial heritages.

Unlike many reemerging boroughs, Pottstown has not had rail transit to Philadelphia since 1981, when SEPTA shut down its diesel-powered lines.

It has a train station, though, built in 1928 and on the National Register of Historic Places. It's one of the 956 buildings in the Old Pottstown Historic District, which includes downtown.

Pottstown also is home to the Hill School and has a publicly owned, privately operated transit system. There are some fine neighborhoods, such as Rosedale in the north end, as well as a top-notch seniors center, a branch of Montgomery County Community College, nice parks, a YMCA, and a medical center.

Though it may be struggling, the market there can surprise.

"We just handled the sale of a twin in the borough that sold in four days," Himes says (by his calculation, average days on market top 190).

"It was in move-in condition, the seller had done lots of work on it, and it was in one of Pottstown's more desirable areas." Yet the sale price of $100,000 was typical, he says.

Looking at the last six months, Miller says, sale prices have been as low as $12,000.

"Most of the houses that sell in the $12,000-to-$45,000 range are bank-owned," the result of foreclosures, she says.

Himes says bank-owned properties are still tamping down prices and sales generally.

"A lot of people paid too much during the boom," he says, adding that friends walked away from unaffordable properties after being stymied by lenders from doing short sales.

A lot of investors have walked away, too, after appraisals showed that the bargains they were getting were worth less than the mortgage balances.

Re/Max Services agent Chris Nelson says only one in five sales in Pottstown are arms-length transactions; the rest are distressed sales, investor- and corporate-owned.

"Pottstown and Norristown have the largest number of Section 8 and subsidized properties in the county [Montgomery], and it's where investors like to go because of low prices and guaranteed rent return," says Re/Max Services agent Dan McIntosh.

In the last 90 days, 50 percent of sales in Pottstown were bank-owned and under $75,000, Minges says.

Houses in Pottstown are older, and most on the market are in need of considerable work, agents say, which is why Himes' rehabbed twin sold quickly.

"One of the listings is $39,000 - a cute little thing - but unless you are handy, the work will cost you a lot," Miller says.

Though prices make this an ideal market for first-time buyers, they are not jumping at the chance because of the distressed properties.

"If a buyer makes an offer and the seller won't take it," Himes says," the buyer has 299 other properties from which to choose."

Pottstown By the Numbers

Population: 22,480 (2012)

Median income: $35,785 (2012)

Area: 4.9 square miles

Settlements in the last three months: 72

Houses for sale: 300

Days on market: 190

Median sale price: $99,000

Housing stock: 9,973 units, mostly older rowhouses and some single detached.

School district: Pottstown

SOURCES: U.S. Census Bureau; City-Data.com; Andrew Himes, Berkshire Hathaway Home Services Fox & Roach Realtors; Beth Miller, Weichert Realtors; BHHS Fox & Roach HomExpert Market Report

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