From the Philly Inquirer:
In a suburban real estate market described for years as sluggish, it might seem as if, finally, the region is experiencing the recovery it needs.
From April to June, all but one suburban county in the region experienced a rise in property values over the previous year. Several zip codes had increases of more than 50 percent in median home prices. Municipalities that just last year had only a handful of sales nearly doubled their numbers this spring and early summer, and one almost tripled them. The region as a whole recorded 15,636 sales in the three-month second quarter, the most on record in more than a dozen years.
It’s a kind of house-hunting frenzy that some experts say they have never seen before: The number of homes for sale is at record-low levels, and buyers are becoming increasingly desperate to secure the home they want. No longer is it unusual for homes to sell just one or two days after going on the market, and real estate agents say open houses are flooded all day with shoppers.
“They want the home that is in truly move-in condition and they’ll pay a premium for it,” said Kathleen Hartnett, a Narberth-based real estate agent with Duffy Real Estate.
The result has been bidding wars, offers well above asking price, and buyers willing to take the risk to waive their standard protections, such as mortgage and appraisal contingencies, to beat their competitors. All the while, it presents a strain on millennials and middle-income buyers, who are finding a dwindling supply of starter homes for sale in the seven-county suburban region, as builders have focused on more expensive homes amid high land and labor costs and tight lending standards in order to turn a profit.
If the shot of energy flowing through the suburbs seems too good to be true, rest assured that it just might be. In both individual municipalities and the suburban region as a whole, the housing recovery is complicated and fickle — the spring and early summer months are typically the hottest times in the market — and there’s no guarantee the rush will last.
“The numbers clearly indicate that Philadelphia’s housing market had its best quarter since the recent housing-driven recession,” said Kevin Gillen, a senior research fellow at Drexel University’s Lindy Institute for Urban Innovation, who gave the Inquirer an analysis of home sales from the Trend Multiple Listing Service and Houwzer. But, he continued: “We’ve been here before. … There have been other recent quarters where [the numbers have spiked] as well, only to subsequently slump again.”
Despite sizable gains this quarter, the suburbs still have room to grow: According to Gillen’s data, home values across most counties in the region — Delaware, Bucks, and Montgomery in Pennsylvania, and Gloucester, Camden, and Burlington in New Jersey — still remain below their pre-recession peaks (Chester County is nearly even with 2007’s home value). South Jersey in particular has struggled — in Camden and Burlington Counties, for example, home values, on average, linger 25 percent lower than they were in 2007. In Philadelphia, meanwhile, home values have surged 17 percent higher than their former peak, making the suburban slump even more jarring.