Housing market booms for sellers, buyers and agents
Betsy and Bill West have been a longtime real estate team in this corner of Pennsylvania. Over the past 15 months, the pandemic has impacted their livelihood in a spectrum of ways, feasting on them initially, then creating a feast of opportunities for the Cecil Township couple and their brethren of agents and Realtors.
Residential real estate has become a smoldering industry nationwide, one that essentially has been a sellers market and a buyers market for months — and perhaps a year in the Pittsburgh region, according to some analysts.
The primary reasons are simple: Although interest rates have risen since hitting historic lows last summer, they are still below 3%. Rates, plus the infusion of federal stimulus money, have made this a fortuitous time for sellers and, to a lesser extent, would-be home buyers.
Demand, in many areas of the country, outstrips the supply of homes, prompting potential purchasers to compete against one another for a particular residence. A number of them may offer thousands of dollars above the list price, but only one will prevail. Sellers, meanwhile, are beaming like never before. Yet, in many instances, it is a win for both sides.
This is why the Wests, agents for Berkshire Hathaway Home Services in Washington, have adopted a couple of house rules.
“We tell anyone who has a home to sell, and somewhere to go, that they will never get more for it than they will today,” Betsy said last week. “Sellers are getting $10,000 to $20,000 more than they were asking. We’ve never seen that. This is a perfect time for sellers to list and sell quickly.”
On the flip side, she added, “We tell buyers to be aggressive, to be willing to take a chance. Some take on the 1% transfer tax for them and the seller. Some offer to pay owners’ closing costs.
“Sometimes, six or seven offers come in during the first 48 hours (that a home is listed). We sit with the seller and lay out maybe six offers and the pros and cons of each. Maybe someone is not offering the most money, but is willing to pay closing costs.”
This is in stark contrast to the second quarter of 2020, when Gov. Tom Wolf included the real estate industry in his late March shutdown of “non-essential” businesses. Agents struggled, working mostly at home, and consumers — some of whom had already put a home on the market — had to wait. Real estate returned June 5, in a partial reopening by Wolf.
Since then, Scott Cavinee said, his company has “been inundated” with work. Cavinee is the founding broker of SWC Realty, which has offices in Washington, Waynesburg, Uniontown, and Lycoming and Clinton counties.
“It has been crazy, and it has been like this since the governor opened up again,” he said. The boom market “has gone on longer than I thought it would.”
Cavinee said Pennsylvania was the only state where real estate was completely shut down during the pandemic, “and that absolutely should not have ever happened.”
Ovi Manciu is amazed at how the industry is percolating now.
“When something goes on the market now, it sells really quickly,” said Manciu, an agent with Howard Hanna Real Estate in Peters Township. “There are bidding wars.”
He was recently in the midst of such a “conflict.” Manciu said a client of his was enamored of a home for sale in Peters “and was willing to pay $25,000 above the asking price.”
Conversing with an agent representing another interested party, Manciu found that eight offers had been made on that home, and five were more lucrative than the one made by his client.
That individual, Manciu said, is still seeking a house in Peters.
“This is the best opportunity to sell in 10 years,” said Manciu, a North Strabane Township resident. “Things have completely changed. Before, people were making offers 10% below the asking price. Now they’re willing to pay so much, and it doesn’t matter if the home needs to be updated.”
Buyers appear to be flooding the market, and likely are, partly because quick sales result in lower inventory of available existing homes, Manciu said. But he also believes a number of apartment dwellers, working at home while dodging the pandemic’s perils for more than a year, “felt like they were trapped in cage. They had good credit, the rates were low and now they want to get a house with more room and yards.”
Another issue, according to West, “is new home construction is so slow now.” Supply-chain breakdowns and delays have been formidable, and costs of lumber and building materials have been skyrocketing, limiting opportunities for would-be homeowners.
“There is a percentage of buyers looking to build, but new construction is expensive now,” Manciu said. “Builders are struggling to get materials. The price of lumber went so high, builders could guarantee lumber prices for only 30 days.”
So how long will this phenomenon continue? None of these real estate professionals is named Nostradamus, and could offer no watertight forecasts.
The Federal Reserve did not yield any clarity Wednesday when its policymakers indicated because of inflation, they may raise their benchmark short-term rate — which includes mortgages — twice by the end of 2023. They had previously estimated there would be no increase before 2024.
“I don’t see how (the realty boom) can sustain itself, but some people believe it is going to continue,” Cavinee said. “I don’t have a clue. It has already gone longer than I thought it would.”
Manciu said, “I see it slowing down a tiny bit now, but interest rates are still low and homes are still selling.”
“How long will it last?” Betsy West asked, repeating the question. “Speculation is we’ll be going into a shift. But Bill and I have been in this long enough to know that real estate is like a water faucet. It’s flowing, then just as quickly, the faucet shuts off.”