Are bidding wars over Lehigh Valley homes on the decline?
Last year, the battle for the bid, the guerrilla warfare over the Lehigh Valley’s dwindling supply of middle-priced homes, was a public spectacle.
Buyers and sellers blinked in shock at the rate homes flew on and off the market, those priced $150,000-$300,000 selling like hot cakes to the best of eight, 10, even 12 bidders.
National surveys show these bidding wars have largely subsided. Redfin agents this July reported only 11% of their offers ended in bidding battles, compared with 45% in July 2018. In March, Redfin agents reported 16% of offers landing in such battlegrounds, a drastic drop from 61% the previous March.
Though there is no local data available to definitively compare, anecdotal accounts show that in the Lehigh Valley the battles rage on, but more quietly.
The conditions remain ripe for bidding battles. Inventory has continued to decrease, by 10% from April 2018 to April 2019, and by 18% from July to July, according to market reports from the Greater Lehigh Valley Realtors Group. This July, houses only remained on the Lehigh Valley market for 27 days on average — a record low for the region.
And just like they did last spring, houses are selling for about 99% of their listing price.
The proportion of homes that result in competitive offers is virtually unchanged in the Valley, local agents say. If there is any difference, it’s in the nature and depth of the competition.
“Buyers are just frustrated,” said Tim Tepes, co-owner of Lehigh Valley-based Assist 2 Sell Realty. “They don’t want to get involved in a bidding war because it’s just a pain.”
After a year of hype, he said, his buyers know the deal. They’ll see a property that’s advertising an open house but not allowing showings until then — a common way to drive up interest and price — and not even consider it. They’ve learned that by the time they show up at that open house, others will have stormed it, and a mystery buyer might have already made an offer site-unseen.
Mike Bernadyn, an Allentown agent with Re-Max, said he’s seen
a similar dynamic among his clients.
“They’re afraid of the stigma of last year, paying $20,000 over list price,” he said.
As a result, the bidding wars of late involve fewer players — maybe two to five offers instead of eight to 10 — who are “putting more skin in the game,” Bernadyn said.
Last year, the price was right. This year, the emphasis is on the terms, in his experience: putting up $5,000-$10,000 in an earnest money deposit rather than $1,000, and perhaps waiving inspections.
Tim Mahon, an associate broker with Keim Realtors in Bethlehem, said a client recently bought a home in Palmer Township listed at $219,000 that had multiple offers on it, after looking at nearly 20 homes across several municipalities over the last three months.
His offer only came in $200 above the asking price. But he wrote a nice letter.
“You never know what works; you just make sure you try everything,” Mahon said.
Tepes said he still sees buyers, young and old, moving in with their parents while waiting for their dream home in order to avoid having a home sale contingency. One of his clients who used this strategy was a couple in their 60s who moved in with their parents, who are in their 80s.
For single-family homes less than $300,000, Mahon said, he continues to find himself in multiple-offer situations on both sides of the table at a rate indistinguishable from last year. A $210,000 house in Whitehall Township will still sell in one day, he said.
Statistics bear out the difference between the Lehigh Valley and the broader nation. Nationally, according to the National Association of Realtors, closed sales were down about 2% in June from the year before, while inventory was virtually unchanged. This implies fewer buyers honing in on the same number of homes.
In the Lehigh Valley, according to GLVR data, closed sales were unchanged in June while inventory plummeted by more than 16%. That’s the same buyer activity competing for fewer homes.
Sean LaSalle, an associate broker with Berkshire Hathaway, estimates that nearly 40% of those middle-priced homes end up with multiple offers, even in these summer months that are historically slower paced.
A member of his team recently sold a $200,000 home with five offers in less than a week, for example.
The Lehigh Valley is frequently behind national trends determined by pace-setter cities like Miami, New York City and San Francisco. Market forces tend to hit the region later and with less force.
“What normally happens in those areas eventually comes down to the lower-priced homes, in places like the Lehigh Valley,” LaSalle said. “It’s always a trickledown effect.”
Thus the national slowdown reflected in bidding-war reports is bound to hit the Lehigh Valley market soon, LaSalle points out.
It’s like he has said before: “It’s not going to last like this forever.”