From Philly Magazine:
Right now, the competition for properties is so fierce that decent houses get a flood of offers and sell quickly, and even the turkeys find buyers at asking price.
According to Kevin C. Gillen, senior research fellow at Drexel University’s Lindy Institute for Urban Innovation, this market is like none he’s seen in his years of analyzing Philadelphia residential real estate sales. Since last summer, he says, the market has outstripped even the 2008 market, the peak year of the real-estate bubble: “It’s the hottest market I’ve ever seen in terms of turnover rate, the amount of sales, the million-dollar sales, the price appreciation, the rapid turnover of homes once they’re listed. On any metric you want to bring to bear, the market is between red-hot and white-hot.”
Some of this, Gillen says, is due to cyclical factors that routinely affect the housing market. One of those is interest rates that stand at all-time lows: “When interest rates are low, houses become more affordable, and that tends to push prices up.” Combine that with extremely low inventories of houses for sale, and the prices rise even further. “But the other big factor is that after the pandemic, there’s been a structural shift in the economy, from spending outside of the house to spending in the house.”
That’s due to two main factors, he says. “First of all, you have more people working remotely from home than ever before, so your house isn’t just where you live; it’s now your office. Since you spend more time there, you’re incentivized to make the house more pleasant for you.
“On top of that, because of COVID, you couldn’t go out, so all the money that would be spent on dining out or going to the theater and museums or traveling on vacation, people are spending in their home. So your home isn’t just where you live and work; it’s where you play — it’s your gym, it’s your spa, it’s your theater, it’s your restaurant. Your yard is your park.” And people have been willing to spend on home amenities as well as on homes that have them. Gillen says that since the pandemic began, outdoor items such as swimming pools and tennis courts, which usually add no value to a property at best, have skyrocketed in worth. Broker Mike McCann of Keller Williams Philly says that in the suburbs, “People are telling me it takes a year or more to get a pool installed. Even getting servicing for a pool is taking forever.”