Prospective buyers looking to relocate to Mount Airy and Chestnut Hill are especially challenged, say local realtors.
Low interest rates and homeowners’ reluctance to sell during the pandemic has led to a tight market for prospective homebuyers throughout the country. Prospective buyers looking to relocate to Mount Airy and Chestnut Hill are especially challenged, say local realtors.
Janice Manzi, who has been with Elfant Wissahickon Realtors for 17 years, says it’s not just Covid that is responsible for the present situation.
“Anecdotally, that’s what people are saying,” she said, “but looking back three years, it’s been tight for a while.”
She cited statistics about sales in Chestnut Hill since 2019 during the period from January 1 to June 9, which is the season of any given year with the highest activity. During that period in 2019, there were 49 sales; in 2020, there were 37 sales; and in 2021, there have been 52 sales. The average price of home sales ranged from $635,000 in 2020 to $852,000 in 2021.
According to Manzi, homebuyers looking in Northwest Philly have three obstacles to finding their perfect home: homes are appreciating in value; there are more buyers than sellers; and there is a very tight inventory.
Sue Walsh, Vice President and Branch Manager of the Chestnut Hill office of Berkshire Hathaway HomeServices Fox & Roach, said that after listing a property in the $400,000 range recently, “Fifty people showed up at the open house, and [within a few days] there were 10 offers on the property.”
According Kim Whetzel, who has been in the real estate business for 25 years and with Kurfiss Sotheby for the last 2 ½, “The inventory for homes with asking prices below $1,000,000 in Chestnut Hill, has always been tough, but now it is in all price ranges.” In addition, Whetzel said, “There has been a huge demand for new construction.”
According to Manzi, today’s house hunters are interested in buying houses that are “done.” There are multiple reasons for this. One, if both adults in a family are working, often from home, they don’t have time to invest in renovations. Secondly, they can use the mortgage to pay for the cost of the house, but not for the upgrades that might be needed afterwards. And thirdly, it is hard to find contractors to work on home improvement projects. Contractors are very busy right now, because homeowners who decide to stay in their houses are fixing them up.
“It is a tight inventory market,” said Manzi. Because of the combination of urban and green, she says, “Everyone is looking for places to buy in Chestnut Hill.” She cited the low number of deeded properties in Chestnut Hill (between 1,800 – 2,000), compared to the 13,000 deeded properties in Mount Airy.
“It is striking—but again, I don’t think it is just about the pandemic,” Manzi explained. “People are holding onto their houses- Baby boomers are not downsizing as fast as they did.”
Walsh agrees that low inventory is the main reason. “Interest rates are great, “ she said, but “some sellers are hesitant because they feel there is nowhere to go.”
In order to get more leverage, buyers are dropping contingencies. Those desperate to have their offer accepted will forgo home, radon, and termite inspections as contingencies to the sale. Those who can afford it will even offer to forego the mortgage contingency, which requires that the homeowner have enough cash on hand for the purchase of the house. And of course, buyers are also putting in bids that are higher than the asking price.
“Any of these stories you read about: multiple offers, cash offers, removal of contingencies,” said Whetzel, “are happening here. We are a prime example of what is going on in the country today.”
Another trend for homebuyers seeking an advantage is to send the homeowner a “love letter,” which includes personal information about themselves and details about why they love the house. However, agents caution sellers about these letters.
Walsh prefers that the sellers not be influenced by the contents of a love letter. “We want the seller to make the decision based on financials,” she said. “We don’t want them to be persuaded by other factors.”
In order to stay in compliance with the Fair Housing Act, Manzi discourages sellers from accepting love letters. “If they don’t know any personal details about the buyers,” Manzi explained, “they can’t discriminate, either consciously or unconsciously.”
Are realtors expecting the tight market to last long? “I wish I had a crystal ball,” said Walsh. “ I think the interest rates are going to creep up a little, which might deter some buyers.”
“It will continue to be a tight inventory,” said Manzi, “but I think this market will ease a little bit.” However, she doesn’t think prices will go down. “It’s not like 2008, when the economy crashed due to the real estate market.”
Kim Whetzel is hesitant about making future predictions. “I don’t see it changing,” she said, “although everything ebbs and flows.”
All three realtors advise prospective homebuyers and sellers to be educated about the process as it is currently practiced.
Manzi recommends that potential buyers be pre-approved for a mortgage, and to make sure to see the house early on. She also recommends looking at houses below their intended price point, “Because you know the house are going to bid up.”
“I think the buyers really have to be prepared financially, and be educated about what multiple offers means,” said Walsh. She advises sellers to be prepared for multiple offers. “Don’t be afraid of it, “ she said. “I think sellers definitely need to go over the buyers’ financials with a fine tooth comb to make sure they are qualified.”
All three of the realtors we spoke with agree with Kim Whetzel’s final recommendation that “A really good agent is more valuable now than ever.”