Realtors say rising house prices in Chester County are likely to continue – Daily Local
WESTERN CHESTER – As mortgage rates continue to rise, potential homeowners who will not block a home soon will never be able to afford it, local realtors warn. The seller’s market, at least in the region, seems to have existed for quite some time.
“I tell my buyers that (demand for homes) may never cool down in this area,” said Steve Loret, who leads Steve Lorette’s team from the Vanguard Realty Alliance in West Chester. “I know this is a bold statement. But for every house we build, we have two people moving into the area. We are in irreparable rotation. “
In March, housing prices in Chester County were up 9.6 percent from a year earlier, averaging $ 460,000. Homes in Chester County sold for an average of 17 days, up from 28 last year. And in March, Chester County had just 398 homes on the active list, up from 705 in 2021.
Demand is growing, supply is declining, and this is the main reason why homes are rising so fast in price not only in Chester County but across the country. Two years ago, homes in construction near Highway 303 near the Boot Road exit in West Goshen sold for $ 450,000. Today it is $ 650,000.
And buyers, anticipating their home will soon appreciate, overpay.
“A few weeks ago, we settled on one that cost $ 600,000 and $ 710,000,” Loretta said. “It’s crazy, but it really goes back to supply and demand. In two decades, we have been producing houses less than the average for 50 years, and COVID has by no means led to where we are today. ”
Tammy Dühring, a realtor with RE / MAX Excellence in Kenneth Square, said she expects Chester County to remain in the vendor market next year.
“We just sold one in Unionville School District last week, an offer in cash, it was $ 50,000 more (asking price),” she said. “In some areas, people will still overpay. It will level off and will continue to be a market for sellers because there are too many buyers for the number of homes available. ”
Historically, low interest rates have been the driving force behind the madness of buying a home, but that could change if the Federal Reserve takes steps in an attempt to curb inflation. The 30-year fixed-rate mortgage averaged 5.27 percent for the week ended May 5, up from 5.10 percent a week earlier, according to Freddie Mac, a government-funded public enterprise. This is the highest figure for the last 13 years and much higher than the average of 2.96 percent for this time last year.
Lorette said there are two factors against potential home buyers. Over the past two decades, homes have been underdeveloped, and a turning point has been reached in terms of population growth, especially in the region.
“These two factors are amplified to create this pressure cooker,” Loretta said. “Meanwhile, all the demand that existed, which created an extreme market for sellers, all these buyers, they are not disappearing. Then we open the construction industry to problems with supply chains and inflated costs for materials and finding other materials – all these costs are outrageous. The deficit is driving the market. “
Chester County is a place where people want to live, and it shows in numbers. The average cost of a home in Chester County last month was just over $ 495,000. It is $ 324,000 in neighboring Delaware County and $ 314,000 in Lancaster County. The current average listing price in West Chester is $ 500,000, in Downingtown – $ 440,000, in Malvern – $ 650,000 and in Coatesville – $ 265,000.
As the cost of homes continues to rise rapidly, this is affecting the rental market.
“As housing becomes less and less affordable for the average population and as inflation rises, rents will continue to rise,” Loretta said.
The average rent in the first quarter of 2022 in Chester County was $ 1,788, according to the National Low-Income Housing Coalition. This is 12.7 percent more than in the first quarter of 2020. This means that tenants need to earn more than $ 24 an hour to afford an apartment.
Like other realtors, Loretta urges potential homeowners to take action now if they can before they block the market due to soaring prices.
“Get everything you can, this is literally the advice I give to my friends and family,” Loretta said. “Buy a house in Potstown for $ 80,000, it doesn’t matter. It will soon cost 150 thousand. If you bought a house for $ 10,000 in West Chester in 1950, the same house is worth a million bucks today. It has four bedrooms and 2.5 baths and keeps you dry at night. With the historical devaluation of the dollar, the only way to insure against it is to buy real estate. “
Some realtors in Chester County see parents liquidate their 401 (k) retirement accounts, give cash to their children so they can compete in the market, buy a house for cash, let the children turn around and calculate the money and return the money to their parents.
“In today’s housing market, millennial people have big problems,” said Loretta. “There is a widening gap between the rich and the poor. There will be people who have real estate, and there will be people who have never tried to do so.
And what about those savvy buyers who are waiting now aside, just waiting until the bubble bursts and house prices stabilize?
“Buyers waiting on the sidelines, waiting for everything to be done, shoot at a target that is moving away from them,” Loretta said. “They will suffer.”