By Julie Hankins
“Now is a GREAT time to buy real estate,” is what we are hearing from the media these days. With mortgage interest rates hitting their all-time low within the last 6 months of 3% on a 30-year fixed, and mortgage lenders loosening their purse strings to another starving first-time homebuyer, real estate is now all the rage.
The American Dream of Homeownership is becoming more of a reality. Buyers want to get in at bottom line prices, while interest rates make it extremely affordable allowing one to get more home for their money. Spectators who have been sitting on the sidelines waiting for their savings to slowly increase, or their credit to improve, or their current home to stop drowning, are now feasting on the active inventory of homes for sale. We are now entering the days of multiple offer scenarios, low days on market, and homes selling for above-asking price. This market has slowly gone from a buyer’s market to a more equal playing field.
In the Philadelphia area, the average home price has increased to about $259K, 3.8% above Q2-YTD-2012. The dollar volume is more than $6.9 billion, an increase of 20% over Q2-YTD-2012 (which was almost 14% above Q2-YTD-2011). Unit sales are almost 27,000 units; more than 16% above Q2-YTD-2012 & pending sales are 31,000+ units, 18% above Q2-YTD-2012. New listings are 55,000+ units, 4% above Q2-YTD-2012 and similar to 2003 and 2009-11. Days on market for closed properties are 89 DOM per closed property, down 14% from 104 DOM in Q2-YTD-2012. Finally, the inventory (Annualized Absorption Rate) has dropped to 7.3 months, more than 2 months below JULY-2012.(1)
This is old news for real estate investors out there. Investors have been buying real estate for years now and have been gobbling it up at low prices since 2008/2010, anticipating the present demand. Investors have been buying distressed, REO, underwater properties and have been renovating and reselling or renting these properties for some time.
According to Lawrence McKnight, president of BMK Homes, a developer in the Philadelphia metro area, “For over a year we have been getting BMK homes under contract before they are even built…there appears to be pent up demand for new properties. We have matured into the city’s premier real estate developer. Selling homes faster than a developer can build is a good problem to have and strengthens BMK Homes’ relationships with banks and their private lenders.”
In 2004/05/06 the Philly area was a seller’s market and there are signs of moving back toward that trend. In Q2-YTD-2005, the average home price increased to $170,800, 10.8% above Q2-YTD-2004 with prices at $154,100. While in Q2-YTD-2006 the average home price increased to $179,400, an additional 5% increase from the year before. (1) Even though today’s 3.8% increase with an average price of $259K is not 2006’s 5% increase, it is still optimistic being that we have been in the negative for the last few years. Real estate is definitely a local phenomenon and there are parts of the city experiencing a 30.6% median price increase above Q2-YTD-2012, with other areas experiencing minimal price increases. When purchasing real estate, know your local area demographics and pricing history.
(1) The statistical information was taken from the “Market Statistics” section in the TREND MLS. The statistics were downloaded on July 15-17, 2013.
Julie Hankins started her 8 year real estate sales career selling out “The Reserve at Packer Park”, a 230 unit, new construction residential housing community in South Philadelphia for Westrum Development Company. Julie is experienced in New Construction, Development and Sales, and is a licensed realtor at HomeStarr Realty, as well as a member of The Hurst Team. Julie is an investor herself and is an expert when it comes to working with “first time” homebuyers. Her “no nonsense” professional approach to selling and buying homes is a resource to the community. To contact Julie, please email Julie@MyHurstTeam.com or call 484-368-4558.