August 18, 2021
After a busy spring and summer buying season in Philadelphia, potential homebuyers and sellers who may have taken a break from the market are likely wondering what’s in store for the rest of the year.
A limited supply of listings coupled with historically low-interest rates on mortgages spurred Philadelphia homebuyers into action, creating a competitive real estate market in the City of Brotherly Love.
Homebuyers in Philadelphia face new challenges when approaching home purchases in the coming months though, which is why the team at Prevu Real Estate compiled these must-watch trends for the remainder of 2021.
As employers deployed work from home policies last year, Philadelphia residents realized their home offices or spare bedrooms did not provide the necessary space to juggle living and working from home.
A need for additional space coupled with low-interest rates drove Philly homebuyers to scoop up the available inventory in the Philadelphia market in late 2020 and early 2021. The excitement in the markets caused prices to rise by approximately 11% across Philadelphia as buyers scrambled to purchase larger properties.
But endless bidding wars and competitive searching fatigued many buyers, and the number of offers per property have retreated over the summer as buyers enjoy their vacations. Sellers may have three to four offers on a home now instead of 15. While competition has leveled off, the number of listings on the market has yet to increase as sellers hold onto their coveted properties.
As buyers and sellers finish up their vacations in August and early September, inventory is expected to grow again this fall.
Homeowners in Philadelphia are getting returns on their home investment in this market, turning large profits on properties that jumped dramatically in value over the past few years.
Not all sellers were keen to cash in on the flurry of activity, hoping to get the best price for their property. The worry now for some homeowners is that any newfound gains will immediately be needed to purchase their next high-priced home.
The idea of selling an ideal home, only to compete with other buyers over a limited inventory of houses, gave many sellers pause.
But as Americans enjoyed the summer, buyers and sellers both hope that the fall season will bring more listings to the market.
Rising home values dominated the first half of 2021, and cost-conscience Philadelphians sought solutions to increase their competitiveness when making offers. Buyers creatively courted sellers by making concessions in their bids and interviewing multiple mortgage brokers to find the best interest rate.
In addition to interviewing multiple lenders, Philadelphia buyers interviewed various brokers and discovered commission rebates that effectively increased their purchasing power.
A commission rebate is simple: When a homeowner purchases a property, the broker provides a percentage of their commission fee in the form of a rebate. Commission rebates are legal in 40 states, including Pennsylvania and the added savings enable buyers to increase their purchasing power.
Prevu Real Estate passes savings along to buyers with the largest commission rebate in Philadelphia - totaling up to 2% of a home’s purchase price.
American workplaces are at a crossroad as employers roll out hybrid work-from-home scenarios requiring many workers to return to the office at least a few days per week.
The workplace pendulum swinging back toward in-office is causing homebuyers to rethink their search and focus on homes with a reasonable commute again. As employers deploy hybrid plans, the remainder of 2021 will see buyers debating between larger dwellings or finding units closer to the office.
Shifting priorities affect the market, pushing buyers to rethink purchasing homes in the suburbs back in favor of the city.
Low mortgage rates incentivize Americans to take their inaugural steps on the property ownership ladder. Interest rates fluctuate every day, but rates for 30-year mortgages routinely fall below 3%, while 15-year mortgages sit around 2.25% or lower.
The cheaper cost of borrowing inspires Philadelphia buyers to enter the market, increasing competition to purchase available listings. Buyers and sellers can expect rates to remain low throughout the remainder of 2021 keeping a tailwind to the real estate market near term.