Montgomery County seems to be the place to be for prospective homeowners.
“There’s too many buyers for the inventory that exists,” said Keith Kline, a Realtor at Coldwell Banker Hearthside in Collegeville, noting a trend observed by real estate professionals in the area’s housing market.
If you want to see how hot the real estate market has been, stop by the county office that records transactions.
The Montgomery County Recorder of Deeds office processed more than 76,000 documents in the first six months of 2021, according to the office. Typically, the county agency will record roughly 100,000 documents in a given year.
Pandemic brings people to Montco
Local real estate agents and brokers agree the COVID-19 pandemic contributed to bringing city dwellers out to the suburbs in search of property.
“They could go out, maybe get a yard ... they'll have more space inside and out,” said Jon Christopher, a broker and owner of Christopher Real Estate Services in Plymouth Meeting. “So that spurred a lot of buyers to move into purchasing.”
That has kept county workers extremely busy.
“I am so proud of my team,” Montgomery County Recorder of Deeds Jeanne Sorg said in a statement. “We have been working diligently every day throughout this entire pandemic and were only closed for two days back in March 2020.”
Sorg noted the process of buying and selling real estate pivoted to adhere to health and safety guidelines put in place during the 2020 pandemic, adding that “eRecording” was an essential tool, “88 percent [of documents] came through one of the office’s four eRecording partners.”
A bar graph illustrates the increase in documents recorded in the Montgomery County Recorder of Deeds office during the first six months of a …
However, that number has increased dramatically in recent years.
In 2019, there were 42,178 documents recorded, and 50,624 documents were recorded in 2020, according to officials. Recently, 76,075 documents were recorded in Montgomery County during the Jan. 1 to June 30 window, according to officials.
School districts, low interest rates contribute to popularity
Some real estate professionals have found that families flock to Montgomery County because of the area’s prominent school districts.
"If you go by school district, they’re always the ones [that] have the shortages because people want to be in those good school districts,” said Mike Sroka, a broker with Keller Williams Main Line, with offices in Ardmore and Conshohocken.
Current low interest rates on housing loans have also contributed to the area’s popularity.
“It’s the economic situation we’re in right now because people want to lock in really good interest rates,” Sroka said.
According to Zillow, the average 30-year fixed mortgage rate in Pennsylvania is listed at 2.69 percent in Pennsylvania.
Data points recorded as of July 23 illustrated that rates can differ depending on the type of loan, according to Zillow. For instance, a 10-year fixed-rate averaged at 2.24 percent, a 15-year fixed rate averaged at 2.13 percent and a 20-year fixed rate was listed at 2.90 percent.
“If someone wanted to buy a $500,000 house [at] say 5 percent, what [would] that payment would be versus $500,000 at 3 percent?” Sroka said.
“That’s a huge difference, and when you take that over the term of 30 years, you could be talking over $100,000 they’re saving in interest. Right?” he continued. “So that makes a real huge difference for someone that might not be able to afford a $500,000 house at a higher rate versus at a lower rate, which the rates are really good right now.”
Realtors have noticed high volume spanning across varying types of property.
“In Montgomery County, you can get anything from a single-family home from $100,000 all the way up to multiple millions,” Christopher said. “That makes it attractive and able to be reached for buyers of every price point pretty much.”
Competition in county's housing market
Along with other real estate professionals, Sroka saw an uptick in activity in the market over the past several months.
“This was the craziest spring market. I've been doing this for 21 years. This is historical because you had the end of the pandemic with the spring market and the low interest rates,” he said. “So those three things created a frenzy for people to want to buy something which in turn the supply and demand made the prices skyrocket.”
Sroka clarified that the “spring market” starts roughly in January. Once a buyer chooses the house they want, it typically takes about “60 days to close” on the offer, which means that “usually, they’re settling by the beginning of summer.”
That often brings on intense competition for prospective homebuyers looking to bid on property here in the state’s third-most populous county.
“We’re seeing increases in market value, but on top of that because [of] supply and demand functionality, we’re seeing bid-ups well above what actual true market values are,” Kline said.
“So more buyers in the market and not enough homes to purchase it creates a really competitive situation,” he continued. “I was seeing situations anywhere from 10,15, 20 or more offers on a house on the price point in the area.”
Which leaves the seller to select which buyer they want to purchase their home.
While a component could be simply choosing the highest bidder, Christopher found “there are a lot of factors” involved.
“Many buyers have been waiving inspections, they have even been waiving mortgage contingencies — meaning that it’s viewed as a cash offer,” Christopher said. “So price isn’t necessarily the only factor when considering an offer to accept from a seller's perspective.”
While agents “always recommend getting a home inspection,” Sroka acknowledged it’s “up to the seller or the buyer if that’s something they want to take on." However, he said it's something “we have seen that a lot lately.”
Christopher used a “home with stucco” as an example.
“In another market, that would have a very in-depth inspection. It would be very detrimental to the home’s value, and in this market buyers are so eager to purchase that some buyers are looking past that, and waiving an inspection for something like that or any other related inspections,” he said. “So it’s really created an opportunity for houses that would normally not be able to sell or have some sort of detriment to value to get sold for a really good price.”
Advice for prospective homeowners
When looking to purchase a home, Sroka recommended people “always consult with a professional before making a decision, someone that specializes in the area and knows the trends.”
But as cases of the novel coronavirus continue declining, and semblances of normalcy slowly return, real estate professionals expect things to slow down a bit.
“It’ll taper off, it's already started,” Sroka said.
"It’s still a seller's market," Christopher said. "It still has a lot of momentum. But shifting from something where like I said 15, 20, 25 offers down to maybe a handful or five-to-10 offers, that’s the relative slowdown.
“In general, people are just I think gun-shy at this point,” Sroka said. “If they lost out on maybe five or six houses, they decided to take a break and regroup to see what’s gonna happen.”
Others stressed that it might take a while to find their forever home.
“They need to understand to be patient and not get discouraged,” Christopher said. “I’m trying to encourage my buyers to not get discouraged because everything changes, markets always change. So this market will change. it will balance out.”
“There's a little bit more consumer confidence in regards to the pandemic, and getting life started again, so that’s opening things up and creating a little bit more balance within our marketplace,” Kline said. “So for me, if I’m a buyer, and I've had some disappointment in the past year, I think now’s the right time to be jumping back in for the opportunities.”