Housing market hot in PA since lockdown restrictions lifted
In Pennsylvania, the housing market all but vanished for two months at the start of the COVID-19 pandemic.
Gov. Tom Wolf didn’t consider real estate as an essential business. Homes couldn’t be shown in-person. Buyers stopped looking in earnest. Some sellers decided to pull their listing to wait for a more normal and stable time.
But since June, there has been a complete 180 when it comes to real estate transactions.
“Incredible as it is, the real estate market is hot,” Lawrence Yun, chief economist with the National Association of REALTORS® told the Harrisburg Patriot News.
In Pennsylvania, the average days a property was listed on the market went as low as 16 days for a period of time, which was incredibly low.
And it’s not like there’s a real estate hotspot either in the commonwealth. Instead, it’s a trend that reaches from Philadelphia to Pittsburgh and everywhere in between.
William Festa, the 2020 president of the Pennsylvania Association of REALTORS® (PAR), told the Patriot News that there is a lack of inventory, an influx of buyers, homes receiving multiple offers and many of the homes are selling over the asking price.
Yun said the reason for this boon is likely tied to low mortgage rates and buyers willing to pay a little more than normal for a home, knowing the interest on their loan would be so low.
According to Freddie Mac, as of the week of August 6, 2020, the rate on a 30-year fixed mortgage was down to 2.88 percent and the 15-year fixed average was 2.44 percent. In 2018, both of those rates were well above 4 percent.
Couple this with more companies switching to remote working, allowing their employees to work from home, and Millennials, who make up the largest percentage of buyers in the housing market, are now looking to the suburbs as opposed to city living.
“We’re hearing more and more from our realtor members that people have changed their preference,” Yun said. “Rather than a condominium in a city, they’re looking for a single-family home with more space — maybe with a dedicated office room.”
Middle-priced homes – those between $150,000 and $250,000 – are doing extremely well. But according to PAR data, homes under $500,000 are moving. It truly is a seller’s market for Pennsylvania properties.
And it promises to stay that way through the remainder of 2020, Yun said.
However, construction is lagging. And when that happens, the inventory diminishes, prices climb based on simple supply and demand principles, and buyers can be priced out. However, currently most markets are seeing a price gain between 3 and 5 percent. If it starts to climb higher, then there could be greater affordability problems than currently exist.
Until then, houses are selling like hotcakes because buyers want to take advantage of low interest rates while sellers want to get the most value for their home.
With so many people who have lost a job or been furloughed during the COVID-19 crisis, it’s really quite a remarkable notion that real estate might end up being the one industry to ultimately benefit from the economic fallout of a global pandemic.
“The housing market is just incredible,” Yun said. “In the midst of the pandemic and double-digit unemployment rate — the market is hot.”