According to Trulia.com, a website that tracks real estate trends in markets nationwide, the average sales price of Philadelphia real estate is up. I saw this first hand on a property I recently sold in the Northeast. My wife an I moved in the summer of 2008 and were unable to sell our property for a price we could accept. Only a year an a half earlier, during the height of the boom, the house had appraised for $145,000. Before we decided to place it on the market in last summer, we installed a new bathroom and kitchen to entice buyers to pay full price. The best offer we received was for $125,000.
Well 2009 told a different tale. For the last year and a half we've had an excellent paying tenant that's taken better care of the property than I had when I lived there (thanks Yvette!). But as her lease was coming to an end, I decided to test the waters for another sale. I had a few Realtor friends of mine pull a list of comparable sales, talk to some of their clients and give be a ballpark of how much I could expect to make on the property. It's amazing how much difference a year makes. Just from a few pictures I'd forwarded to the Realtor, I had an offer of $149,000. It seems like Obama's housing program worked pretty well to raise the price of homes. I decided to do some homework and see what the other numbers were telling me.
Imagine my surprise when I saw that although the sales price of residential homes in Philadelphia did rise, the overall volume of sales fell. For those that know me, they'll vouch that I'm a capitalist through and through. So how is this possible. The demand is not high enough to absorb the large volume of houses currently for sale on the market. Some estimates say that it will take at least 5 years to bring the ratio of buyers to sellers back into some recognizable equilibrium. And yet prices rise.
My opinion is that people saw the reduction of $6500-8000 that they did not have to come up with in order to buy a house (Again, thank you Obama). They looked around and found the very best property they could buy for their money. What did they choose? They chose the very best properties on the market. The houses with updated kitchens and bathrooms. They chose the row house in a little bit nicer area than where they lived. In short, they chose properties at the higher end of the pricing spectrum in every neighborhood.
The good news for home sellers is that if your house is in great shape . . . if you have a new kitchen, bathroom, a finished basement, refinished hardwood floors, that little extra pizazz . . . your house will sell now for more than it would have in 2008. The bad news is, everybody else will have a tough time selling at all.
So the moral of the story is sell now if your house is perfect. If not, take what you can get. It's still a tough market and even with the promised economic recovery we have a long way to go before the housing market is out of the woods.
If you would like a free, no obligation offer on your property (whether it's in excellent condition or needs some work) give my company at call or check out our website for more information.
Sunday, January 24, 2010
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