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I've been actively looking to buy a house in the city proper since May, and have put offers on three places all in different neighborhoods (University City/Germantown/Manayunk). I'm looking in the $300-$360K range, and I've offered at least $20K over, included an appraisal gap, and an inspection addendum that I wouldn't fuss about repairs under $5K. I'm pre-approved and have 20% down. I've been outbid every time. I know that inventory is limited due to COVID and coupled with low interest rates that there's a lot of buyer demand, but to be honest, I did not think it would be this hard to get a house in the city (maybe the suburbs I could understand). I feel like I'm constantly reading about how poor this city is overall, and how people are leaving for more space, but that doesn't seem to be my anecdotal experience. Are New Yorkers really flooding the housing market that substantially?
I'm looking to stay in the home for 10+ years so I'm not trying to the time the market for investment purposes. I guess I'm just looking for any advice from folks who have been successful, and predictions on whether or not more inventory will be available come early 2021. Or anyone who would like to just commiserate! I'm just disheartened as I feel like my family is finally in the position to purchase, and this market is just insane.
I've been actively looking to buy a house in the city proper since May, and have put offers on three places all in different neighborhoods (University City/Germantown/Manayunk). I'm looking in the $300-$360K range, and I've offered at least $20K over, included an appraisal gap, and an inspection addendum that I wouldn't fuss about repairs under $5K. I'm pre-approved and have 20% down. I've been outbid every time. I know that inventory is limited due to COVID and coupled with low interest rates that there's a lot of buyer demand, but to be honest, I did not think it would be this hard to get a house in the city (maybe the suburbs I could understand). I feel like I'm constantly reading about how poor this city is overall, and how people are leaving for more space, but that doesn't seem to be my anecdotal experience. Are New Yorkers really flooding the housing market that substantially?
I'm looking to stay in the home for 10+ years so I'm not trying to the time the market for investment purposes. I guess I'm just looking for any advice from folks who have been successful, and predictions on whether or not more inventory will be available come early 2021. Or anyone who would like to just commiserate! I'm just disheartened as I feel like my family is finally in the position to purchase, and this market is just insane.
I don't have a lot to contribute here - mostly commiserating ...
It's true that New Yorkers are moving to Philly in greater numbers than Philly->NY. That might contribute to some of the market weirdness you're experiencing, but it's not a new phenomenon (i.e., maybe a bit COVID driven, but not started by COVID).
You mentioned 3 'hoods that are pretty different WRT demographics, price ranges, and location. Maybe, maybe the way to tweak your search is to identify a single neighborhood and get a realtor who really, really knows that area's inventory and quirks. That's what my wife and I did when we moved to Philly in 2008 - did a lot of research on, then visited, quite a few areas. Then when we found East Mt Airy we evaluated realtors and selected one that seemed to have the best knowledge of the area. That was "a process," to be sure, but it worked out well. If you're interested in either East or West Mt Airy, PM me and I can give you my realtor's particulars.
Other posts will, I'm sure, give you an idea of how long this sellers' market will last. I'd be interested in hearing that myself :-)
Yeah I have nothing helpful to add just sympathy. We toyed with the idea of buying a new house to get more space due to a significant increase in value of the current house. We decided against it due to the difficulty in buying a new house. We looked at two and both sold within days above asking. We just weren't interested in getting wrapped up in a bidding war.
The current climate seems to be a tied to a lack of inventory. I think this is making more of a difference than new yorkers moving south. Many people believe the bottom will fall out when mortgage foreclosures are allowed to proceed. This could result in a significant increase in inventory so I could see that happening. If it does happen we might then to buy our next place and just rent out the current house.
I think luck might play a big role right now. Friends of mine recently got a place in West Mt. Airy before it went on the market. They got a good price because they were able to complete the transaction without agents which saved the seller a lot of money on commission.
Anecdotally i've noticed a lot of people who wanted to be in East Mt. Airy (where I live) but were priced out. Consequently they are buying houses in neighborhoods like Cedarbrook and West Oak Lane.
I've been actively looking to buy a house in the city proper since May, and have put offers on three places all in different neighborhoods (University City/Germantown/Manayunk). I'm looking in the $300-$360K range, and I've offered at least $20K over, included an appraisal gap, and an inspection addendum that I wouldn't fuss about repairs under $5K. I'm pre-approved and have 20% down. I've been outbid every time. I know that inventory is limited due to COVID and coupled with low interest rates that there's a lot of buyer demand, but to be honest, I did not think it would be this hard to get a house in the city (maybe the suburbs I could understand). I feel like I'm constantly reading about how poor this city is overall, and how people are leaving for more space, but that doesn't seem to be my anecdotal experience. Are New Yorkers really flooding the housing market that substantially?
I'm looking to stay in the home for 10+ years so I'm not trying to the time the market for investment purposes. I guess I'm just looking for any advice from folks who have been successful, and predictions on whether or not more inventory will be available come early 2021. Or anyone who would like to just commiserate! I'm just disheartened as I feel like my family is finally in the position to purchase, and this market is just insane.
I feel your pain. I'm looking for a townhome in the suburbs and it's the same thing out there. The supply is extremely tight, and on Monday I lost one after bidding $45k above asking price on $400k townhome. It was the fifth I've missed in as many weeks. Every Tuesday I will get depressed and am back looking again on Wednesday.
Low interest rates and very low inventory are driving prices skyward. Six months ago, I thought the recession and the listings of foreclosure bans would increase inventory but I no longer subscribe to that. It's just very tough and probably will be at least through the winter.
The only area of opportunity seems to be in fixer uppers. They can languish for a while. By the time you improve them you have a lot of money out of pocket and end up paying as much or more than a renovated unit...
Well, I'll take a stab at analyzing this. Please keep in mind that I am a very minimal, and relatively risk-adverse, investor so please keep those disclaimers in mind. I have a handful of Philly properties that I currently rent. However, I bought in very different times than today; so, it was substantially easier to pay mortgages off and then snowball that extra $ into other rentals - so on and so forth. Note, I always lived very lean and payed debts before I bought new items or comforts or VKs, or... you get it. Net/net, mortgages were relatively low at my price points (not the rates, just the mortgages, bc I usually put like 50/60% down) and I tripled paid them, and then more, until they were gone. NOTE: I didn't deprive myself of QOL, I just tried not to waste money on nonsense.
Regardless, here's my take on the current housing market:
1. HUGE inventory deficit: This is not to say in all of Philly proper, but rather in the neighborhoods within, say, 20 minutes of 20th and Market. This is just an example cross-street, but you get my point I hope. The NE and Far NE and Mount Airy and Chestnut Hill and Germantown have their proponents on this site for sure; and, they are wonderful neighborhoods in their own right, with their own pros and cons. I simply have seen less interest in buyers being so far removed from the city, yet paying into, and for, the city. NOTE: This is not to say that these areas won't massively increase on their own. I used to work in the Princeton, NJ area. If someone is sitting on a house in the Far NE or lower Bucks County, it could blow up, as Central Jersey continues to expand on route 1 with businesses and Yardley continues to price out an average buyer. I personally don't see it, but I don't know that area as well as the city core.
2. Loans rates are probably the lowest we will ever see in our lifetimes:
This means, as a previous poster alluded to, that there is no reason to worry about spending 360k for a house you think might not gain value. Or, it's not worth haggling over 10- 30k to get a "good deal." With a 3.5% rate as opposed to a more normal rate of say 6.5/7%, you will save, over a standard 30 year loan, a ton of money. Google a mortgage calculator and put the numbers in yourself. It's pretty amazing/depressing to see how aggressively the banks front-load the interest.
3. Philly is no longer a secret:
I've been touting this for years. Philly has arrived. As much as the naysayers on this board want to project a massive exodus from the city, that is far from true. My company is based in Manhattan and literally every singe zoom meeting i have, someone asks me about Philadelphia. They're not asking about Media and Plymouth Whitemarsh and Quakertown, et... (basically where the haters are implying people are fleeing to during this pandemic). Trust me, Manhattanites, Bostonians, DCians? (that can't be right) have little interest living in our suburbs. They look at a Philly rowhome with a roofdeck and garage and 2500 sq. ft. with a tax abatement and literally can't believe their eyes.
True story... a 35 year old colleague of mine, making, probably with bonus, around 250k gross, was renting a 2 bedroom, 640 sq. foot apt. on the 65 floor of an Upper East Side high-rise, with no outdoor space for 2800 a month. She and her roommate were splitting this, and actually thought they were lucky bc they got their own rooms. So, I guess the rent was 5600/month. She's since moved to Austin and couldn't be happier. Bottom line, is Philly is one of those awesome metros that gives people what they want at an amazing reduced priced in the NE corridor.
Anyway, bottom/bottom line, my reco is to buy soon if you can. I am personally waiting until late Q1 2021, but that's bc I don't actually need another property. That's my best guess when the market will get stagnant. However, I'm buying with cash. And I'm also looking at the FL areas where they're getting hammered and a lot of bank repos are happening. If you need a loan, I say, lock that in ASAP. Short of a massive recession or depression, once rates raise and housing prices normalize to what they actually should be in Philly (50% - 150% higher) you might not have a chance to buy ever again in Philly. This year (or 2019, can't remember) already has more than quadruple million+ properties selling than any other year ever. Coupled with ridiculous low loan rates and very low tax rates (they will rise, but it will take time),
IMO, now is the time. And, you really can't go wrong. Example why it's virtually risk free: Let's say you buy a house 5 blocks from the heart of Passyunk Sq. in South Philly for 310k. You bought it to live in, but have to move for whatever reason. So, you think about renting. It's 1000 sq. feet, 2 bedrooms, one den (or tiny bedroom) and one bath, but in decent shape. If you put 20% down, your mortgage, taxes, insurance would more or less be around 1600/month (and that's high). You could rent that all day long for b/t 1750-2000. So you're making money as someone else is paying for your house. Each year, more goes to principal. You'd be shocked how quickly you can bang that "30 year loan" out. And you don't have to worry about market fluctuation, which will probably be all over the map in the coming years.
Conclusion, if you're holding more than 75k in Capital One or another vehicle making nominal interest, you should be seriously considering buying you and your family a house, or, if you can't find one that fits the bill, buying a rental. Just my opinion. And I didnt' even get into section 8 which is a straight up gold mine, but a headache.
Wow, sorry for the diatribe people. I just really hate when people burn money on rent or pay banks interest. Drives me crazy.
Sandy can probably fact check this rant or at least give some other opinions. He's extremely tapped into the entire market. I'm just going off what I see, experience and think... Sandy?
Last edited by Pennsport; 11-11-2020 at 10:42 PM..
I don't have a lot to contribute here - mostly commiserating ...
It's true that New Yorkers are moving to Philly in greater numbers than Philly->NY. That might contribute to some of the market weirdness you're experiencing, but it's not a new phenomenon (i.e., maybe a bit COVID driven, but not started by COVID).
You mentioned 3 'hoods that are pretty different WRT demographics, price ranges, and location. Maybe, maybe the way to tweak your search is to identify a single neighborhood and get a realtor who really, really knows that area's inventory and quirks. That's what my wife and I did when we moved to Philly in 2008 - did a lot of research on, then visited, quite a few areas. Then when we found East Mt Airy we evaluated realtors and selected one that seemed to have the best knowledge of the area. That was "a process," to be sure, but it worked out well. If you're interested in either East or West Mt Airy, PM me and I can give you my realtor's particulars.
Other posts will, I'm sure, give you an idea of how long this sellers' market will last. I'd be interested in hearing that myself :-)
Glad to see that I'm not alone! We currently live in University City and wanted to stay due to the great community we've built, but it's just not realistic at this point for the type of house we want (something with character and we're trying to steer away from flips). My husband works in Montco, so that why we've shifted our search to the northwest neighborhoods. Unfortunately, it seems like a lot of other folks have had the same idea. Our realtor says she has many Fishtown/South Philly couples looking for the same thing we are: more square footage and green space. We're pretty happy with our realtor, but we may take you up on the recommendation in a few months if we're still in the same spot--East Mount Airy is definitely on the list!
I feel your pain. I'm looking for a townhome in the suburbs and it's the same thing out there. The supply is extremely tight, and on Monday I lost one after bidding $45k above asking price on $400k townhome. It was the fifth I've missed in as many weeks. Every Tuesday I will get depressed and am back looking again on Wednesday.
Low interest rates and very low inventory are driving prices skyward. Six months ago, I thought the recession and the listings of foreclosure bans would increase inventory but I no longer subscribe to that. It's just very tough and probably will be at least through the winter.
The only area of opportunity seems to be in fixer uppers. They can languish for a while. By the time you improve them you have a lot of money out of pocket and end up paying as much or more than a renovated unit...
Wishing you all the luck in your search, too! In the beginning, I thought I lucked out waiting to buy a house because I thought that the pandemic and civil unrest would definitely drive down city prices. Obviously, not so much.
Anyway, bottom/bottom line, my reco is to buy soon if you can. I am personally waiting until late Q1 2021, but that's bc I don't actually need another property. That's my best guess when the market will get stagnant. However, I'm buying with cash. And I'm also looking at the FL areas where they're getting hammered and a lot of bank repos are happening. If you need a loan, I say, lock that in ASAP. Short of a massive recession or depression, once rates raise and housing prices normalize to what they actually should be in Philly (50% - 150% higher) you might not have a chance to buy ever again in Philly. This year (or 2019, can't remember) already has more than quadruple million+ properties selling than any other year ever. Coupled with ridiculous low loan rates and very low tax rates (they will rise, but it will take time),
IMO, now is the time. And, you really can't go wrong. Example why it's virtually risk free: Let's say you buy a house 5 blocks from the heart of Passyunk Sq. in South Philly for 310k. You bought it to live in, but have to move for whatever reason. So, you think about renting. It's 1000 sq. feet, 2 bedrooms, one den (or tiny bedroom) and one bath, but in decent shape. If you put 20% down, your mortgage, taxes, insurance would more or less be around 1600/month (and that's high). You could rent that all day long for b/t 1750-2000. So you're making money as someone else is paying for your house. Each year, more goes to principal. You'd be shocked how quickly you can bang that "30 year loan" out. And you don't have to worry about market fluctuation, which will probably be all over the map in the coming years.
Thank you so, so much for this incredibly thoughtful and detailed reply. I really appreciate it, especially since in some of the other forums I follow it's all doom and gloom about how the market is going to crash and how everyone buying now is just repeating 2007. And I agree with you, I don't think that's going to be the case.
Your only point that I slightly disagree with is your view of the northwest neighborhoods. My realtor is saying that the northwest has gotten much hotter with the pandemic, with a lot of Fishtown/South Philly couples looking for more square footage (WFH) and private green space. She says that she's having trouble moving inventory particularly in the smaller South Philly rows. And thanks for invoking Sandy! I'd hoped he'd weigh in.
Wishing you all the luck in your search, too! In the beginning, I thought I lucked out waiting to buy a house because I thought that the pandemic and civil unrest would definitely drive down city prices. Obviously, not so much.
I've bought and sold a half dozen properties in Illinois and New York, beginning in 1998. In that time, I've never seen anything remotely liked this. At its core, this is an interest rate driven event.
With a 6.5% loan it costs $602/month for $100k borrowed. At 2.625% it costs $401/month.
Think about that for a minute. A $300k mortgage went from $1806/mo to $1203/mo. For $500k, it went from $3009/month to $2005/mo.
It's a wonder that prices have not gone up further. When interest rates fall, though I do not expect that anytime in the foreseeable future, there will likely be a drop in prices. But as Pennsport correctly states, the property would likely rent for a lot more than you are paying to finance it.
Best of luck to all out there who are experiencing the buyers side of this market. It is a battle out there and this is a time when a good buyers agent really earns their keep.
Anyway, bottom/bottom line, my reco is to buy soon if you can. I am personally waiting until late Q1 2021, but that's bc I don't actually need another property. That's my best guess when the market will get stagnant. However, I'm buying with cash. And I'm also looking at the FL areas where they're getting hammered and a lot of bank repos are happening. If you need a loan, I say, lock that in ASAP. Short of a massive recession or depression, once rates raise and housing prices normalize to what they actually should be in Philly (50% - 150% higher) you might not have a chance to buy ever again in Philly. This year (or 2019, can't remember) already has more than quadruple million+ properties selling than any other year ever. Coupled with ridiculous low loan rates and very low tax rates (they will rise, but it will take time),
IMO, now is the time. And, you really can't go wrong. Example why it's virtually risk free: Let's say you buy a house 5 blocks from the heart of Passyunk Sq. in South Philly for 310k. You bought it to live in, but have to move for whatever reason. So, you think about renting. It's 1000 sq. feet, 2 bedrooms, one den (or tiny bedroom) and one bath, but in decent shape. If you put 20% down, your mortgage, taxes, insurance would more or less be around 1600/month (and that's high). You could rent that all day long for b/t 1750-2000. So you're making money as someone else is paying for your house. Each year, more goes to principal. You'd be shocked how quickly you can bang that "30 year loan" out. And you don't have to worry about market fluctuation, which will probably be all over the map in the coming years.
Thank you so, so much for this incredibly thoughtful and detailed reply. I really appreciate it, especially since in some of the other forums I follow it's all doom and gloom about how the market is going to crash and how everyone buying now is just repeating 2007. And I agree with you, I don't think that's going to be the case.
Your only point that I slightly disagree with is your view of the northwest neighborhoods. My realtor is saying that the northwest has gotten much hotter with the pandemic, with a lot of Fishtown/South Philly couples looking for more square footage (WFH) and private green space. She says that she's having trouble moving inventory particularly in the smaller South Philly rows. And thanks for invoking Sandy! I'd hoped he'd weigh in.
You very well might be right, and if our new working dynamic moving forward (vaccine or no) trends more remote than not, then there is a real possibility those areas take off. It's certainly beautiful architecture and land in the NW neighborhoods. I would have no qualms buying there for a personal residence if the location and taxes/prices, etc... made sense for me. When thinking investment however, I personally stay away from what I would consider limited upside situations. There are no real employment HQs to speak of, the amenities are scarce and everything is pretty much car-centric in the NW neighborhoods. There is really only one reason to move to the NW areas, and that is personal preference for having space, yards for kids/dogs, historic and beautiful homes.
I have a few good friends who moved to Chestnut Hill and Mount Airy when they started families. They certainly like it well enough, but they might as well live in any neighboring suburb. For rare examples like Sandy, it's no big deal to walk to the train station and take a 40 minute ride into the city. For most though, an hour each way is a serious commitment just to go to a favorite restaurant or show in town. Most of my friends that live out there now rarely come into town anymore. To me at least, taking frequent advantage of Philly's amazing food scene, attractions, festivals and the such, is the main reason to live in Philadelphia.
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line, my reco is to buy soon if you can. I am personally waiting until late Q1 2021, but that's bc I don't actually need another property. That's my best guess when the market will get stagnant. However, I'm buying with cash. And I'm also looking at the FL areas where they're getting hammered and a lot of bank repos are happening. If you need a loan, I say, lock that in ASAP. Short of a massive recession or depression, once rates raise and housing prices normalize to what they actually should be in Philly (50% - 150% higher) you might not have a chance to buy ever again in Philly. This year (or 2019, can't remember) already has more than quadruple million+ properties selling than any other year ever. Coupled with ridiculous low loan rates and very low tax rates (they will rise, but it will take time), 
