THROUGH THE ROOF
Real estate market in Chester County in a frenzy as bidding wars intensify
A few months ago, real estate professional Steve Laret sold a 5 bedroom, 3.5 bedroom house at Branford Village in East Fallowfield Township for $300,000. Two months later, he sold a 4 bedroom 2.5-bathroom house for $310,000. And a month later, he sold a 3 bedroom, 2.5-bathroom house for $320,000.
“Buyers are bringing all cash to the table, and appraisals are guaranteed,” said Laret, owner of West Chester-based Steve Laret Team.
Laret said he sold a house in Chester County last year for $300,000 and it appraised for $412,000 last week.
Real estate professionals say prospective buyers should be prepared to offer more than the listing price if looking for a house in Chester County, especially in the price range of $750,000 and lower. And the seller’s market could stay for quite some time.
“I really don’t believe (the seller’s market) will end for homes under $750,000 in and around Chester County,” Laret said. “The factors that led to the real estate bubble in 2006 are pointing in the exact opposite direction today. Then, it was based on inflated appraisals. Now, it’s people bringing in money they have worked so hard to save, and bringing in a briefcase full of cash to settlement. All of this happened organically.”
Home values in Chester County have risen 12 percent in the past year. In the past few years, an average of 2,000 houses per month are offered up for sale in Chester County. The total house inventory in March of this year was just 565.
Last March, the median sale price for Chester County Homes was $355,000, according to statistics compiled by the real estate firm Long & Foster. This March, the median sale price was $416,280, an increase of 17 percent or $61,280 compared to last year. In neighboring Delaware County, the median house price increased from $239,000 to $277,000, an nearly 16 percent increase in just one year.
The problem is a lack of housing inventory, local real estate professionals say.
“In Chester County, we have 25 percent of normal inventory,” Laret said. This is a hyper-aggressive market,” Laret said. “Couple that with rising lumber costs with lumber up 400 percent, and we are 10 million houses behind national demand, meaning we would need to build what we normally build every single year, plus an additional million homes every single year for a decade, just to fix the supply problem that exists today.”
Tammy Duering, Realtor at RE/MAX Excellence in Kennett Square, said she has never seen a real estate market in which buyers constantly offer above list price.
“I tell my buyers to look at houses $20,000 to $30,000 under what they can afford because they have to offer that much. I’ve never seen anything like this in my life. It’s totally crazy.”
Duering said buyers are getting creative in gaining an advantage in bidding wars, by waiving home inspection fees, waiving house appraisals and a willingness to pay the transfer tax for the seller.
Houses in Chester County are staying on the market an average of just 14 days. That’s 65 percent lower than a year ago.
First-time homebuyers are the ones feeling the pinch. The winners are the homeowners nearing retirement who sell their homes
and move into smaller accommodations.
As an example of runaway housing prices, Laret pointed to a townhouse project off of Route 202 near Boot Road outside of West Chester that started at $450,000 when it opened a few years ago and is now selling for $650,000.
“The only way to let the pressure off the kettle is to have more inventory,” Laret said. “Buyers are telling me they will wait a year or two for the market to cool off. I tell them that it will not cool off, especially at the lower price points. If they are bold enough to plant their flag now, buyers bold enough to get in will be the haves. Those waiting on the sidelines waiting for the market to soften will be the have-nots.”
Even many local builders are pumping the brakes on building projects. A sheet of plywood that sold for $15 last year is now selling for $75. When builders price projects, they set a timeline on their price guarantee, usually a couple of weeks.
Meanwhile, it’s the worst of times for local Realtors.
“We used to spend eight weeks with buyers — three or four weeks to shop and four weeks at the settlement table,” Laret said. “Now, we are spending 10 months with buyers putting in 15 offers and getting rejected. I tell them if it’s the house you really want, throw everything you have at it.”