There are two ways to look at the current Main Line real estate market. Optimists breathe a sigh of relief that conditions in our area don’t mirror those in places like Nevada and California. They can certainly find solace in the fact that Pennsylvania had just 4,000 properties in foreclosure last October, as opposed to Florida’s more than 54,000. Local real estate agents offer assurances that if a house is priced right and in good condition, it will sell.
Still, pessimists have plenty of reasons to be, well, pessimistic. Without a doubt, the local market has softened. In Montgomery, Bucks and Chester counties, 20 percent fewer homes sold in 2008 than the year prior—and it seems sellers are as cautious as buyers, slowing the pace of real estate transactions across the board.
For her part, realtor Carol Ogelsby is eagerly anticipating the spring season (February-July). “It always tends to be the best time of the year because we have a lot of out-of-towners looking to buy,” says Ogelsby, who’s worked out of the Rosemont Prudential Fox & Roach office for the past 12 years. “These buyers can be at any price point, but a lot of them are high-end.”
Last year, spring was pretty good to Ogelsby. “It wasn’t as high as 2006 or 2007,” she admits. “But, honestly, if the seller wanted to sell and the buyer wanted to buy—and if they could come to terms and be flexible on both sides—it was a good market.”
Then came the fall. Mortgage companies went bust, the stock market plunged, and the buying and selling on Ogelsby’s end pretty much came to a halt. “So much of real estate is an attitude,” she says. “If you feel confident and you feel like everything is going to be OK, then you have a different outlook on what you’re willing to do. That’s what the avenue is in every aspect of life—but particularly in housing.”
Last fall, no one was feeling especially confident. Unemployment rates reached their highest level in 16 years, and year-end bonuses were few and far between. Meanwhile, the media kept reminding us how bad it was. “These things psychologically cast a pall over everything, from retail to car sales to real estate,” says Ogelsby. “People get scared—and when people don’t feel good, they’re not willing to take a chance.”
REASON TO HOPE
It’s hardly a surprise that local agents are looking to this spring as a new beginning—one that may or may not come as quickly as they hope. “In today’s market, everything is taking just a little bit longer,” says Terry Kirkwood, an agent with Duffy Real Estate in St. Davids. “Buyers are taking their time, there’s definitely not the sense of urgency we saw up until 2006. We’re waiting a lot longer for sales to happen.”
These days, not many buyers will entertain the possibility of two mortgages, so they want to sell before they buy. That further slows the market. The most cynical buyer is waiting for the proverbial bottom to fall out. But that could be a long wait.
“Six months from now, houses in the Philadelphia market won’t be 20 percent less,” says Steve Storti, senior vice president of marketing at Prudential Fox & Roach. “We’re not as affected by the price bubble that has happened in other parts of the country. You’re not going to see a consistent erosion of home prices in this area.”
Historically, the Main Line has been an extremely stable real estate market. “The extreme activity in the years of 2003, 2004 and 2005 that drove homes to appreciate as much as 12 percent wasn’t natural,” says Storti. “That couldn’t have continued.”
And the Main Line doesn’t attract an overwhelming number of buyers from outside the area. “According to research, homebuyers here move every seven to 10 years, and move one to two zip codes away from their existing address,” says Storti.
That said, realtors like Ogelsby weren’t seeing all that much “trading up” among buyers within the various Main Line communities last year. “In 2006, when the market was high, people were enthusiastic to move on—so to speak—and forget putting on a new wing to their current house and just buy a bigger house,” she says. “We haven’t been seeing that as much anymore within the last year.”
BUSINESS AS USUAL?
Despite the slowdown, there are still sellers selling and buyers buying on the Main Line. With the low interest rates and tax incentives, it’s a great time for first-timers to make an investment in a home. But now more than ever, good credit is essential, and pre-approval by a reputable mortgage company is an obligatory first step in the homebuying process.
For sellers in today’s market, proper pricing is crucial, as buyers definitely aren’t afraid to submit low-ball offers. “Before, we were encouraging our buyers to go above the asking price,” says Kirkwood. “Now, with some of the prices buyers want to submit, you bite your tongue as a realtor and say, ‘OK. We’ll submit it and see what happens.’”
Buyers are offering as much as 15 percent below asking prices. “Depending on how anxious the seller is to sell, buyers might get that price,” Kirkwood says. “More often, the price is negotiated. It used to be, if buyers saw the value in the house, they would pay the price. Not anymore.”
And more negotiating means more work for realtors. “We’re going back to doing what we were trained to do,” says Kirkwood. “We’re working—not just order-taking.”
These days, sellers must also have their homes in the best shape possible. Working couples don’t have the time or the desire to fix up a house. Rosemont realtor Kathy Maud tells sellers to make all necessary repairs before they put the house on the market. “A property absolutely has to look its best,” she says.
More and more realtors are also recom-mending the services of a professional home stager. Even the smallest improvements can make a huge difference. “Cleaning up the clutter and putting away all the knickknacks is an absolute must,” says Kirkwood.
Sellers need to take a realistic look at what comparable houses in their neighborhoods sold for in the past six months and then price their houses accordingly. “Some sellers hold out and refuse their first offer,” says Storti. “But in this market, the first offer might be your best.”
And while it’s not as common these days, multiple offers do occur. “We have to constantly educate our buyers and sellers on what is realistic for this market,” says Ogelsby. “Because, if you’re watching the national news, you’re getting a warped sense of what the reality truly is on the Main Line.”