Buyers and sellers in the Greater Philadelphia region will enter a highly competitive housing market in 2016 as the economy continues to get stronger. Forty-one percent of agents reported that both buyers and sellers will have equal power in 2016, an increase from 37 percent last year, while buyers’ power decreased from 44 percent to 34 percent, according to a survey released today by Berkshire Hathaway HomeServices (BHHS) Fox & Roach, REALTORS®. The online survey of 347 BHHS Fox & Roach agents in the Greater Philadelphia area was conducted from November 3-20, 2015.
Agents feel positive about current regional market conditions for both buyers and sellers, but the sellers position is strengthening as 53 percent of agents feel it is a good time to sell (up from 48 percent in 2015), while the percentage of agents that feel it’s a good time to buy remained the same as last year (77 percent).
Data from the BHHS Fox & Roach HomExpert First Nine Months report shows monthly average inventory has remained relatively stagnant since 2012. Limited housing options will continue to fuel competition, with 30 percent of agents reporting that limited supply/inventory will be the biggest hurdle homebuyers will face in 2016.
In spite of the competitive atmosphere, agents are still seeing 67 percent of buyers submitting an offer below asking price, hoping the seller sees they overpriced the home, and 11 percent are willing to walk away if they need to increase their offer that will increase their mortgage from their current home. (See graph in appendix.)
The Tech Effect
The role of the Internet in real estate continues to grow, with 90 percent of agents reporting that the internet is the primary tool for their clients when they first look for a home. Underscoring the reliance on technology is a surprising 11 percent who have worked with a buyer making an offer on a house without seeing it in person in the last year.
Agents cited that information on popular real estate sites allows their clients to do their own listing searches, look through preliminary information, and compare the market value on different types of homes and locations before the agent speaks with them. This accessibility allows the buyers to have a narrowed search when working with the agent.
“Our agents are constantly adjusting to and working with the new technology trends so they can continue to help consumers wade through all of the information,” said Steve Storti, Chief Marketing Officer at BHHS Fox and Roach REALTORS®. This will determine what is necessary to allow them to make smart decisions regarding buying and selling a home.”
Location, Location, Location
In 2016, agents predict that homebuyers will be interested in single family homes close to Center City Philadelphia (40 percent) (a 27 percent increase from last year), while 25 percent will want single family homes in a rural location (a 16 percent decrease from last year), 24 percent won’t care what kind of location as long as it is close to their work, and 11 percent will be interested in a townhome or condo close to Center City. This change in location preference correlates with BHHS’s HomExpert Report data showing 29.5 percent increase in homes sold in Center City in the first nine months of 2015 compared to 2012 and 9.6 percent increase from 2014.
Neighborhood characteristics are also important. Eighty-three percent of agents said that buyers were looking for good public schools, affordability of the home (73 percent), safety of the area (57 percent), short/easy commute to work (42 percent), and ability to access local amenities like restaurants and shops, and having outdoor space (32 percent).
Additional Survey Data:
What Buyers Want
According to regional agents, the top factors that will drive home buyers in 2016 include:
Price of the house (88.82 percent), quality schools (66.47 percent), favorable mortgage interest rates (59.82 percent), change in life situation (47.43 percent), size of home (44.41 percent) and daily commute to work (39.58 percent) were the top six results.
Fifty-seven percent of agents predict that homebuyers will want homes that are less than 10 years old, while 16 percent say homebuyers will want older homes (10+ years), 5.25 percent say buyers will be looking for inexpensive homes that need to be fixed, and only seven percent believe that homebuyers in 2016 will be looking for new construction.
Importance of Technology
The online tools the agents said their buyers used most were Zillow (91 percent), Realtor.com (70 percent), Trulia (70 percent), foxroach.com (15 percent) and Homes.com (10 percent).
Berkshire Hathaway HomeServices Fox & Roach invited all their regional real estate agents to respond to a market sentiment survey. To view the complete survey results, please visit foxroach.com/2016AgentForecast.