Connor and Gabby McKenna had what they thought was a reasonable wish list when they set out to find a home on the Main Line. They wanted a pleasant, structurally sound house for their young family close to the SEPTA rail station in Wayne—a must for an easy commute to their jobs in Philadelphia.
For months, the McKennas searched online for homes in their target area. With demand eclipsing supply, listings evaporated like drops of water on a hot griddle. “With so few homes available, we soon realized we needed someone with in-depth knowledge of the market and lots of connections,” Connor says.
Rock-bottom inventory is the biggest factor in home sales nationwide plummeting to their lowest rate in more than 20 years. Blame higher mortgage interest rates, which rocketed from an average of 3.2% in 2022 to 7.31% in 2023. Prospective sellers with low mortgages are loath to commit to a higher one on their next home, so they’re staying put. The high cost of borrowing also impacts prospective buyers, who are finding their money isn’t going as far.
Throughout the Main Line and western suburbs, demand—and home prices—remain high. Rightly so, buyers are fixated on the area’s stellar school systems, abundant retail and restaurants, and well-paying jobs. In 2023, the most popular destination in the nation for online home searches was West Chester, according to Zillow.
Not surprisingly, competition is fierce—even for upper-end properties that typically take longer to sell because the pool of affluent buyers is smaller. Homes priced under $2 million are selling quickly and often at a premium. In Bryn Mawr, a 4,200-square-foot house with a pool and 1.4-acre lot changed hands within a month for $1.975 million, nearly $100,000 above listing price. A conveniently located six-bedroom, three-bath colonial in Ardmore was snapped up for $60,000 above its $1.25 million asking price, while a buyer threw in an extra $125,000 for a 5,550-square-foot Gladwyne home originally listed at $1.7 million.
To acquire their coveted slice of the Main Line, the McKennas turned to BHHS Fox & Roach’s Beth Mulholland. “Beth knows everyone and is always talking to other realtors about listings they have coming up,” Connor says. “She’d sometimes devote half an hour to talking with us in the evening about strategies.”
The couple already had great credit, a distinct competitive advantage. They were preapproved by two different lenders, with underwriting that guarantees the loan. Still they found themselves losing out to buyers who could pay cash. “That’s something new we’re seeing in this market,” says of Mulholland, who’s based in Devon. “Traditionally, buyers didn’t want to show all their assets because it could put them at a competitive disadvantage in negotiating price. Now, they’re eager to show they are financially sound. We’ve never seen so many parents, grandparents and trusts backing the buyer.”
As their search continued, the McKennas made offers with built-in escalation clauses that enabled them to automatically enter counteroffers in bidding wars. “We stopped looking at homes at the top of our budget because we expected the homes would go over the listing price,” Connor says.
They also waived contingencies and home inspections. To gain insight into the condition of a house, the McKennas opted for walk-and-talks, touring a property with a licensed home inspector who could point out structural flaws and other issues. “It costs about $300, takes 45-60 minutes and is all verbal. No written report, no radon inspection,” says Mulholland. “The inspector is looking for red flags like a bad roof, mold or foundation problems.”
During an intense seven-month house hunt, the couple bid on five homes. Each time, another buyer prevailed. “We had really strong offers, but some of the people we were up against had enough cash to buy the house outright,” Connor says.
Mulholland reached out with a new listing when the McKennas were on vacation a the Shore. But by the time they returned the following day, they were too late. The house was already under contract to a buyer who made a full-price cash offer. Because decisions must be made quickly, Mulholland often gives would-be buyers an electronic preview that includes a virtual walk-through, interior floorplans and drone shots of the lot.
So who’s listing these days? Often, it’s an owner who’s downsizing to a second home. There are heirs selling estates, and professionals making job transfers. Still, divorce, retirement, career changes growing families and other life events aren’t enough to satisfy overwhelming demand. In a superheated market, Mulholland says it’s not unusual for buyers to spend over a year tracking down their home. Some suffer buyer fatigue, worn out from the roller coaster of whirlwind home tours and bidding wars. Many revise their wish lists, dialing back from a single-family residence to a townhouse. After losing out on turn-key homes, they may opt for a fixer-upper.
First-time buyers have been especially hard hit, with higher mortgage rates shredding their budgets. A $300,000 thirty-year mortgage at 3.5% would result in a monthly payment of $1,123 a month. That same loan at 7.5% comes out to $2,098 a month—and that’s before property taxes. “There just aren’t enough properties on the market that many first-time buyers can afford,” Mulholland admits.
Builders are trying to keep pace with demand. Off Route 202 in Malvern, Toll Brothers is currently working on 280 new homes on 159 acres, with amenities like a pool and pickleball court. Prices start in the $700,000s. A luxury condo complex, 427 Wayne, is sited a short stroll from the St. David’s SEPTA station, offering two-bedroom, three-bedroom and penthouse floorplans from 1,882 to 3,544 square feet with prices up to $2.5 million. The cherry on top is a green-roof garden. The Towns at Newtown Walk, a low-maintenance community of four-story townhouses adjacent to retail, is walkable to Whole Foods, Main Line Health facilities and restaurants. Prices start at $900,000.
As for the McKennas, they stuck to their wish list and became the new owners of a four-bedroom 1920s-era home on a quiet street just a four-minute walk from the train station. Although they didn’t compromise on location, the couple did have to make financial concessions, paying $130,000 above list price. They plan to refinance their 7% mortgage when rates go down. Fannie Mae reports that interest rates are expected to drop below 6% by the end of the year in response to anticipated rate cuts by the Federal Reserve Bank.
“We were so sad to lose out on those other houses,” Gabby says. “But in the end, we wound up with the best one—a home that’s perfect for us.”
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