Yes, The Local Real Estate Market Is Still Going Strong
Who knew 2021 could get even better?
Restaurants, the hospitality sector and many services were slammed last year with lockdowns, social distancing and staying at home ruling the days for most of us. Yet many realtors reported being in overdrive with a booming local market.
Although things do slow down during August vacations and September school-prep, the fall real estate season generally shifts into a new gear later in the year. We wanted to check in to see if the record-setting level of activity was sustainable.
A Busy Summer
After the constraints of 2020, buyers, sellers and their agents learned how to do business under new conditions—no big open houses, all masked visits, remote document signing. The real estate business found a way forward.
“By 2021, there was another year’s worth of pent-up demand,” says Amy McKenna, of Country Properties, Berkshire Hathaway. “Those buyers who waited to see what would happen in 2020 joined the search for a new home to meet their expanding lifestyle and work needs. And with a refocus on home and hearth, the pool of buyers got even bigger, adding to the demand.” In short, more people wanted to move.
Add to that, continued low interest rates and ongoing interest in the Brandywine Valley as a place to live—with low taxes and high quality of life.
“To our surprise, 2021 has been an even stronger year for home sales in our area,” says Holly Gross, of the Holly Gross Group. “We were very fortunate to have such a good year in 2020, so it’s gratifying that 2021 is exceeding our expectations. We’re continuing to see interest from outside our immediate area—from New York state as well as New York City. This has made even higher-end properties attractive, including raw acreage.”
While most of Chester County is desirable, West Chester, Downingtown and Unionville have been particularly active. “One of our recent listings in West Chester had 15 showings on its first day on the market,” says Stephen Gross, of the Holly Gross Group. “There were multiple offers and the sales price set a record in the Borough of $2 million!”
“There’s another side to those multiple offers, though,” says Missy Schwartz of Berkshire Hathaway. For every happy new homeowner, there may be 14 unhappy potential buyers who didn’t get that dream house, along with their 14 busy agents who wrote up 14 offers that were not accepted.
“Some folks forget there are two sides to the sales transaction. Buyers’ agents are very busy writing up multiple offers for their clients. I’ve had buyers who’ve made 8 or 9 unsuccessful offers. That’s heartbreaking … for everyone,” says Debra Sparre of RE/MAX Direct. Searching for the right home and closing the deal take plenty of patience and energy all around.
Some believe that rationality is beginning to temper an overheated market. “Recently, we’re seeing less overbidding, fewer inspections waived, fewer all-cash offers. More buyers are thinking about the value of their new lifestyle,” says McKenna. “For example, if you’re buying a farm, it’s not an impulse purchase. You’re buying a lifestyle, and you need to find the right farm.”
Educating the Buyers … and Sellers
Realtors are busy educating their clients on the realities of today’s changing market. “Unlike earlier in the real estate market, buyers shouldn’t make a low offer and expect to negotiate upward from there,” says Sparre. “Conditions are very different now, and buyers need to understand that. Too many properties sell for over the asking price for buyers to bid low and expect to be in the running.”
More buyers are doing preliminary searches online, so agents spend less time driving them to tour a wide variety of properties to get a sense of the market. “The process is more streamlined now,” says Schwartz. “Buyers need to be pre-qualified for financing to act quickly. And if there are aspects of the property they need to know about—like being close to a busy road—they need to think about that before visiting,” says Schwartz. Reviewing videos of home tours online also helps buyers triage their house hunting.
“Sellers also need to understand the new market realities,” says Stewart Gross, of Holly Gross Group. “Knowing that it’s a seller’s markets makes some want to price their homes above a fair market value. When that happens, the property may get limited interest.”
Several realtors shared the seemingly paradoxical experience that when a house is priced competitively it will more likely be bid up by multiple offers, often substantially above asking price. Meanwhile, even in a sellers’ market, a similar property priced too high won’t get a nibble. Apparently buyers don’t want to feel taken advantage of. “The fundamentals still apply: the higher the price, the fewer qualified buyers,” says Sparre.
And knowing the realities of the market—not just what a home in the neighborhood sold for—is part of the value added by an experienced realtor to ultimately get a better price for the property. “Helping those who have been planning to retire for years get their property ready to sell is what full-service realtors do,” says Stephen Gross.
Prep for Sellers
Beyond realistic pricing, sellers must also prepare their properties, even in these days of low inventory. “Declutter, purge, paint,” says Karen Nader of Brandywine Fine Properties. “Decluttering is prepping for moving, which sellers need to do anyway. Decide if it’s DIY, hire a service, or rent a POD for temporary storage.”
Painting is also recommended if the owners haven’t repainted recently. “New paint makes everything look fresh and new—even in historic homes,” says Nader. That bright orange bathroom or dusky earth colors will have narrower appeal than a neutral Chantilly Lace white paint job that opens and brightens the interior space.
Staging is the next issue for sellers, again with a range of options. Experienced agents can help owners arrange their pared-down belongings to create appealing rooms. Renting a few pieces to elevate the look of a room or suggest a home office space also works. (Home offices are still among the most desirable amenities.)
“We’ve used virtual staging to help buyers envision the space to their tastes, like redoing an outdated kitchen. Sotheby’s Curate app allows us to quickly transform a room using a variety of interior design styles—traditional, contemporary, farmhouse—right from photos from a phone,” says Nader. “One buyer looking for a modern chef’s kitchen sees one version, while another looking for a farmhouse feel can see a different staging.”
For those of us with limited imagination, virtual staging is extremely helpful. Buyers can appreciate what a vacant house looks like furnished. Virtual images do need to be identified, so buyers aren’t surprised when they visit a home in real life!
What’s a Buyer to Do?
Beyond being willing to pay top dollar for a home—and some buyers use escalation clauses to top competing offers—how can buyers make their offers attractive?
“Figure out what else the seller wants, in addition to price,” says Sparre. “Some sellers appreciate the option to stay in the home after closing to move out at a more comfortable pace.” Other sellers need time to find their next home in this busy market.
Buyers may offer to pay more of the closing costs or repairs needed after an inspection, says Schwartz. If the sellers didn’t do a pre-sale inspection, they may be sadly surprised to learn of unanticipated costs decreasing their profit.
And so-called “buyers’ love letters” are falling out of fashion as a way to get offers accepted. Some buyers would attempt to make their offer more attractive by explaining their love for the property and how much their family would like to live in this special home. Increasingly sellers’ agents make clear they won’t accept these letters, which can raise fair housing concerns.
While more buyers are searching for their best life in a new home, the bottom line for sellers is that it’s essentially a financial decision.
But there is hope for buyers. A recent report from a senior economist with Realtor.com said the market in Philadelphia is migrating toward normalization. Perhaps a bit of that will flow out our way.
We’ll have to wait and see.
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