Hi Brett Furman from the Brett Furman Group to present the monthly marketing report for Chester, Delaware, Montgomery & Philadelphia Counties. The market has roared and certainly not what you would expect during a pandemic. We are seeing multiple-offer situations by competing buyers who are willing to waive inspection contingencies and committing to make up the difference between the purchase price and appraised value if the appraisal comes up short.
This behavior is reminiscent of what happened in the run-up to the real estate crash of 2008. However, this is clearly not the case for the super luxury home market.
What are some of the key factors causing all the changes to the market?
– National Unemployment rates of 11.1 %
– PA state unemployment rate is 13%
– Interest rates are in the high 2’s
Inventory is in a serious decline. In 2019, the average person remained in the same house for roughly eight years. For comparison, the average stay was only four years in 2007.
According to the National Association of REALTORS® (NAR), existing home sales increased at a record pace in June, a significant turnaround after three consecutive months of sales declines due to the pandemic. Completed transactions for all property types increased 20.7% to a seasonally adjusted rate of 4.72 million. Year-over-year, however, existing-home sales are still down 11.3%.
The median sales price for existing homes was $295,300 in June, up 3.5%. So, the under one million market is roaring but the luxury market is cooling. One of the best ways to confirm the luxury real estate market is to analyze the absorption data. This is the number of days it takes the market to absorb or sell.
The data shows that the Luxury home market is clearly a sellers’ market when the price range was $1,000,000 to $1,500,000. However, once the price range increased to $2,000,000 and above the market quickly changed to a buyers’ market.
The data did not yet show the migration of buyers leaving the city for more yard space in the Suburbs. What was truly surprising was that the Philadelphia market outperformed all suburban counties in all luxury price ranges except the counties of Chester & Delaware in the price range of $1,500,000 to $2,000,000.
Make sure you check back with us as we continue to monitor the Suburban migration.
Stay safe, practice social distancing and watch next month’s market report.
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