Delaware County’s real estate market is changing, but it’s more of a correction to a more normal environment, according to some industry insiders.
Beth Endrizzi was a real estate agent in the media office of Long & Foster and was a former director of the Suburban West Realtors’ Association.
“People always need to move,” she says. “People always need to downsize. You always have to move. People always need to move, so it’s not just interest rates to think about.
Even with that, Endrizzi said one of the questions his brokers ask all the time is, “Are we in a recession?”
“We in Delaware County haven’t seen any price reductions,” she explained, adding that homeowners still have significant equity in their homes. “The supply is still low. We saw more ads. As soon as they list, they sell.
She called recent market changes a “slowdown.”
Endrizzi explained that before the pandemic, houses for sale received two to three offers, but during the pandemic, they received 18 to 20.
“We’ve come down to one to three offers,” she said. “The demand is still there but it’s not crazy. It is more of a correction. This is more of a normal market. What we are coming out of is not normal.
Maureen Ingelsby of Keller Williams Real Estate in Media agreed.
“It was like winning an auction,” she said, adding that the most bids she had on a house was 22 bids.
She remembers four different nights of lost sleep.
“I literally didn’t go to bed,” she said, having to process all the 14-page offers plus addenda in the morning. “I haven’t done this since college when I had an all-nighter. From 5 o’clock (in the evening) to 6 o’clock the next morning, I examined all the offers.
The Federal Reserve continues to raise interest rates and mortgage rates also continue to rise. Although the current level is historically close to normal, the market has adapted to the persistent low rates anomaly over the past decade-plus, which was also caused by the Fed.
The Fed continues to raise rates in its belief that inflation will be brought under control, but economists are very concerned that the Fed has already raised rates too quickly and pushed swathes of the economy into recession by making the too expensive money. And the fallout from that is still under the radar but spreading.
New registrations down
New listings have been on a downward trend in Delaware County over the past six months, although homes continue to come on the market.
Last month, 656 new listings were placed on the Delco market, down 19.6% from September 2021.
The biggest drop was seen in August when new listings fell 23.7% from a year earlier with 612 new listings.
However, supply remains tight and it is still a seller’s market, according to industry experts.
Endrizzi said while the market was changing, Delaware County was doing well.
“When someone makes a listing, homes still sell pretty quickly,” she said. “We haven’t seen prices come down.”
Further, she said Delco’s market is a reasonable market.
“We’re in an affordable price range,” she said.
She said that house values could go down a bit, maybe 5%. However, she thinks that won’t happen for a long time.
Along the same lines, she said, even if interest rates go up, again, this is a correction from normalcy. She said that interest rates of 2.5% to 3% were not normal. She said the normal range for these rates was more in the 5% range.
Endrizzi said the market continues to favor the seller.
“It’s always a seller’s market,” she said. “That won’t change until we have more inventory.”
Endrizzi said 70% of the 158 sales agents in his office had their best year at the company last year.
“I’m not going to say it was easy,” she said. “It was a lot of work to get a house under contract.”
Homes still sell quickly, she added, with one to three offers on average.
“You can feel the correction coming and it’s calmer,” she said. “We are still quite dynamic. It will stay like this for a while. I think buyers will continue to see less competition.
period of remorse
Ingelsby spoke about some of the unique features of the pandemic homebuying experience, including buyers buying homes without a home inspection.
“Buyers, she says, are going through a period of remorse. They bought too quickly…they just jumped on it.
There were also times when buyers offered more than the listing price. She recalled a house in Malvern that had been offered $90,000 more than the seller was asking.
Now, however, Ingelsby said: “There is definitely a change afoot. It was an overheated market — a climax — and now there’s a downturn because of rising rates.
Referencing Gary Keller’s book, “Shift: How Top Real Estate Agents Tackle Tough Times,” she said, “Now everyone has picked it up and is re-reading it again.”
Another thing that changed, she noted, is that sellers only wanted a cash offer because some buyers pulled out of their 401(k).
“The poor buyers who didn’t have a lot of money, they were left behind,” she said, adding that they chose to stay rented in their apartment or with their parents until that the market improves for them.
“Now the market, I think, is opening up to buyers who deserve a home,” she said, although the buying power is a little less.
For example, she says, a $440,000 house with a 6% mortgage interest rate would cost $2,638 per month, at 7% that monthly amount exceeds $3,000. For a $360,000 home, a 6% mortgage would be around $2,100 per month. At 7%, that jumps to $2,500.
“These rates hurt”
Ingelsby said it could be some time before mortgage rates come down.
“Renting is also going to get more expensive over time,” she said. “There’s no question these rates are hurting… Some of these tenants would love to buy.”
But, regardless of market dynamics, Ingelsby said, there will always be buyers and sellers.
“Buyers have to buy and sellers have to sell,” she said, “and that’s true.”
This is the most recent Delaware County market statistics report from Tri-County Suburban Realtors.
Real estate statistics
Empirical evidence shows changes in the Delaware County real estate market.
Tri-County Suburban Realtors in partnership with Bright MLS provides a monthly real estate market assessment including Delaware County analysis:
• 566 sales concluded for September, down 18.4% compared to September 2021.
• Downtrend: Sales down 1.3% in April, year-over-year, to 22.1% in July, year-over-year.
• Before that, there were increases: March, up 12% from March 2021; February plus 2.4% compared to February 2021; and November 2021 saw a 6.1% increase compared to November 2020.
• The median selling price of a home in Delaware County in September was $276,500, a 5.2% increase from September 2021.
• In August, the median sale price was $328,000, 13.1% higher than in August 2021.
• The high point was reached in June, when the median sale price was $340,000, 17.2% higher than in June 2021.
On the market
The average length of homes on the Delco market has its ups and downs.
• In September, households remained seated for an average of 21 days, 31.3% more than a year earlier.
• In August, households remained seated for an average of 16 days, 14.3% more than a year earlier.
• In July, homes sold in 12 days, 20% faster than in July 2021.