Year-end 2020 real estate report

Year-end 2020 Market Report

Looking back on 2020 to make decisions in 2021 is a bit like driving while looking in the rear view mirror. No pun intended but you know that saying “hindsight is 2020?” While the past may not predict the future, we are seeing trends that can help navigate a quickly changing market in 2021.

To start, you’ll find an overview of the North American Luxury Market for 2020 with highlights and statistics for Main Line and Center City communities in my year-end Luxury Market Report:

Shifting markets

While a market shift was predicted as early as 2017 due to normal real estate cycles, the effects of the COVID pandemic in 2020 created quickly shifting micro-market changes no one anticipated.

The market is hot, except where it’s not. I don’t mean to be sarcastic but for sellers who were on the market in 2020 and didn’t sell – it can be painful to hear how hot the market is when that wasn’t their experience. Even in a hot market, successful selling requires an aggressive, creative strategy with targeted marketing locally, nationally and internationally.

For buyers, many have felt scorched by the heat of escalating values, competing offers and limited inventory, especially in the suburbs.

There’s no one easy answer to “how’s the market.” In complicated times it’s more important than ever to take a deep, consultative look at the specific market trends that can impact your real estate goals.

What does all that data mean?

Main Line market statistics
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I’ll cut to the chase and share my personal insights.

Philadelphia and communities on the Main Line survived the mortgage crisis without a dramatic bubble and burst. We’ll weather through this pandemic as well.

Do we have a bubble? Leading economists say price escalations are not a bubble but a market response to high demand and low inventory. That’s reassuring, but it also means values are likely to shift as supply and demand changes in 2021.

Philadelphia’s Center City

We can anticipate the desirability of Philly’s low density cosmopolitan lifestyle to retain value. How much and in what areas is impossible to predict.

Pied-a-terre condo

However, as detailed in my market report, the number of new contracts increased in Rittenhouse Square end of 2020 meaning buyers are taking strategic advantage of a strong buyers market, following a national trend for pied-a-terre condo purchase in metropolitan centers.

Main Line suburban communities

Many Main Line home owners who planned to downsize decided their home actually fits for them long term. However, for those who have considered selling in the near future, now is the time to take action and benefit from high demand and low inventory.

You’ll see below that New York suburban markets began cooling off at the end of 2020 with fewer sales, an early indicator of a softer market.

We cannot assume that escalated suburban market values today will remain the same throughout 2021.

New York buyers on the Main Line

From Manhattan to the Main Line was a common story for 2020. Buyer demand for suburban homes on the Main Line made a huge impact.

Competing cash offers for luxury homes that had previously languished with months, even years on the market literally flipped luxury market areas like Gladwyne with a movement you might call Billionaire’s Row to Billionaire’s Village.

Homes with pools and the ability to add a pool became a top post-COVID ‘must have’ for buyers along with work from home flex space, gyms and media rooms. Large estate homes that were seen as undesirable in 2019 started receiving competing cash offers.

What can we learn from New York’s market changes?

Much of the 2020 increase in demand and values on the Main Line was driven by post-COVID urban flight from Manhattan to the Main Line. When the pandemic hit New York city early and hard, we saw an influx of Manhattan buyers on the Main Line as early as February.

Just as New York was months ahead of Philadelphia facing the pandemic, their real estate market may serve as an early indicator for trends coming in 2021.

A recent New York Times article summarized the complex market effects of COVID-19 for New York boroughs – The Market Collapse of 2020 highlighting trends in Manhattan as well as suburban areas.

Is demand for suburban living cooling?

New York appraiser Johnathan L. Miller who covers Manhattan, West Chester, Long Island and Fairfield Connecticut sees the New York suburban demand cooling;

Suburban demand cooling

“The pandemic didn’t create a new class of suburban buyers — mostly, it accelerated the plans of New Yorkers who were already thinking of moving. And while sales remain elevated in several suburbs, compared to last year, their meteoric rise plateaued in the late summer. I think peak suburb has passed.”

While New York suburban demand is cooling, we still have a strong demand suburban living as we can see in the December statistics below:

Montgomery County 2020 Statistics
December 2020 Statistics for home sales in Montgomery County

Will the Main Line follow New York and cool off in 2021? Perhaps, but I anticipate a spring surge of buyer activity as leases signed during the early COVID urban exodus in 2020 come to an end. Buyers are making a more final decision in 2021 on where and what to call home.

We face the potential of a softening demand by summer or fall of 2021 following the trends in New York suburbs as adjustments to our post-COVID work from home realities settle in as our new normal.

Rental decline

Rents for Center City prime locations struggled in 2020 following similar challenges throughout the country in cosmopolitan locations.

For instance, the median rent in Manhattan dipped lower than 2010.

Manhattan rental trends

As reported on my blog, Paul Levy, President and CEO of Center City District spoke to the Path to Philadelphia Recovery in November. Council Member Allan Domb joined the discussion with comments about about Center City’s soft luxury rental market.

As you can see, the effect of COVID on our housing market on the Main Line and in Center City is complex, and quickly changing.

For more information about your specific market, reach out for a confidential consultation. For an instant home valuation visit HomeValuesbySusanna.com.

What’s the future for Center City real estate?

Welcome to Center Cityt

Center City Philadelphia has had some unique challenges this year to say the least. What’s the future for the business focused Center City real estate market?

Literally just days before Philly initiated the new “safer at home” restrictions to fight rising COVID cases, KW Philly hosted the following dynamic presentation by Paul Levy, President and CEO of Center City District about the Path to Philadelphia Recovery.

It’s just over an hour long, so grab a cub of coffee and some snacks. Be sure to stay tuned as Council Member Allan Domb adds some important insights you won’t want to miss at the end during the Q&A session.

Market Reports for Center City

Detailed below are Q3 Center City Luxury market trends, specifically focused on Rittenhouse Square and Mid-Town Philly luxury:

Call me a hopeless optimist, but just like one of Philly’s faves from 2012 – I always have to look at the Silver Lining. In this case, it’s a great time to buy luxury in Rittenhouse Square or in Mid-Town Philly.

In the long run, the livability of Center City Philly with easy access to NY and Washington, DC supports a recovery and resurgence in the area.

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Fall Q3 2020 Real Estate News and Market Reports

Home Office Demands

Telling the story of the current Main Line and Center City real estate market for Q3 2020 is not a simple task. At this particular time, we have a dramatic real-life example of how there are multiple “realities” depending on what numbers we view in which market segments.

Oversimplified reports can lead to bad decisions, especially during challenging times. No one wants to hear “it’s complicated” when dating – or when buying or selling real estate. However, that is the case in the Greater Philadelphia area for Q3 2020.

Now more than ever, it’s important to have detailed information for your particular situation as reported in my Fall 2020 Newsletter.

Fall 2020 Newsletter for Main Line and Center City

In fact, what started out to be my normal market update turned into various reports covering luxury markets in Gladwyne, Villanova and Bryn Mawr on the Main Line, Rittenhouse Square and Mid-Town in Center City as well as the dramatic spike in pre-foreclosure distressed properties.

This is a unique point in time where each of these market segments has been impacted by our national COVID pandemic, political uncertainties and national news coverage of protests and violence in Center City.

Q3 2020 Market Report Summary

Philadelphia broke records in September for number of sales and median sales price primarily driven by a spike in activity after our COVID shut down during Q2.

Philadelphia Market Report

While these results can make an amazing story, it’s not clear that this is a sustainable trend. However, the steady demand and consumer confidence during challenging times speaks well for the stability of the Philadelphia real estate market.

Main Line and Center City Luxury

Luxury Market trends on the Main Line and in Center City are best viewed by year-over-year changes. Smaller number of sales at high values can skew statistical shifts month-over-month.

The biggest Q3 2020 shifts are reflected in Gladwyne luxury market with a decrease from an average of 10 months of inventory to 3 months, and a 26.59% increase in median sales price over the past 12 months.

Gladwyn Luxury Market Report

Other Main Line luxury markets such as Villanova and Bryn Mawr remain in high demand with low inventory. However, the shift isn’t as dramatic because these areas were in high demand pre-COVID due to easy access to shopping, dining and regional rail commuting stations.

Conversely the Rittenhouse Square and Mid-Town luxury markets softened to approximately 16 months from an average of 9 months of inventory. Both of these luxury market segments are largely driven by luxury condo sales such as Two Liberty and The Residences at Ritz-Carlton located in the center of the civil protests during the summer.

Does that mean that Center City luxury is dying? Not at all. Life on Rittenhouse Square is thriving.

Demand for mid-sized cities like Philadelphia within an easy commute to New York and Washington DC make Center City a prime destination for relocating buyers and commuting executives.

Gary Vee predicts we are going 100% into a mixed office environment with a standard for work from home with occasional office visits.

This lasting trend will help support the recovery of Center City.

Pre-Foreclosure Spike

The pre-foreclosure market segment has cross-currents as well. Misinformation from forbearance reporting errors adds to the increase in delinquencies. Although this spike cannot be ignored, it may not be what it seems.

Spike in 2020 Foreclosures

Mortgage crisis vs. COVID

News and analysts typically dismiss the increase in pre-foreclosures as not being the same as the mortgage crisis, citing the strong possibility of forbearances being extended into 2021.

Will forbearances be extended? Most likely. That may only postpone foreclosures if home owners remain in financial difficulty and are unable to bring their mortgage current.

The distressed property market today is not like 2009. An abundance of forbearances is indeed a different scenario than bad loans. However, a different cause doesn’t negate the results. Much hinges on our economic recovery, and home owners ability to convert their forbearance into a loan deferral.

Like other market segments, there are many layers to this “story” and it’s a trend we need to watch.

How’s the real estate market?

A quote I heard years ago applies now more than ever;

“Asking how’s the real estate market from a national perspective is like asking what’s the temperature in America”

There is technically a temperature for the United States, if you average all the temperatures across the country. However, that won’t help you plan your day or know if you need snow boots or an umbrella.

Similarly, if you ask me how’s the real estate market in the greater Philadelphia area, the answer is “it’s complicated.”

As I reported 10 years ago from Kauai’s luxury second home market, it’s a bit like quantum physics. Multiple realties for various market segments. At this point in time in the Philadelphia area, that’s especially true.

Although real estate shifts are normal, this is a very dynamic time, unlike any other real estate market shift we’ve experienced. The question that’s most important is how to best navigate these changing currents for your success.

What’s the future look like?

Both negative and positive Q3 shifts can be attributed to the impact of COVID and political unrest. What can we expect for the coming months?

No one has a crystal ball to predict the future or how sustainable these trends may be. Even the exodus of New Yorkers to large suburban homes may shift to more of a cosmopolitan lifestyle in Center City communities like Queen Village where you have the best of suburban and urban living.

Dr. Lawrence Yun, chief economist for the National Association of Realtors, recently predicted “it will be one of the best winter sales years ever.” Of course, that’s a national generalization. I certainly hope that holds true. However, now is not a time to passively wait and see. It’s a time to apply smart, creative strategies in your particular market to create success for you.

What are your real estate goals?

What’s most important is how we can maximize on current trends to meet your particular short-term and long-term real estate goals.

I’m passionate about supporting my clients with information and concierge, VIP support. As detailed as these market reports are – nothing compares to a personalized analysis for your particular goals.

Let’s talk! Please book a call or Zoom chat on my calendar or feel free to comment below. Your information will remain confidential.

Pre-Foreclosure Market Update – Q3 2020

Foreclosure Market Report

September showed record breaking sales in Philadelphia, but what about the dramatic spike in pre-foreclosure distressed properties? Does the foreclosure market threaten to haunt real estate values in Philadelphia?

Multiple realities of quantum physics

Market reports are complicated with what science fiction buffs might call “multiple realities” – especially true in our current national economy. You don’t have to understand quantum physics, but there are many sides to the story of current real estate market trends on the Main Line and in the greater Philadelphia area.

You’ve probably heard me say this before, analyzing real estate markets is a lot like watching the ocean. What appears to be calm water, can have cross currents and under tows to be aware of.

Let’s start with the good news!

September was record-breaking month for both number of sales and median sales price for Philadelphia County.

On the Main Line, demand continues to exceed supply with values on the rise and days on market declining.

Due to changing buying patterns due to COVID along with the exodus from New York and other dense urban areas our small, quiet Main Line townships have literally shifted into prime destinations.

What about October?

In October the number of showings and new contracts declined. However, all indications are that values remain stable in most areas.

Analysts explain “markets despise uncertainty” and it appears people were holding off on buying or selling until after the election.

An “undertow” of loan delinquencies

Looking backwards at September data one might think that it’s time to surf the big waves and catch the ride of your life.

However, there’s an ‘undertow’ most analysts reporting on real estate are not addressing – a sharp increase in loan delinquencies.

The extreme spike in the number of mortgages delinquent 90+ days or in pre-foreclosure is at a level we haven’t seen since 2009.

Mortgage delinquencies spike in 2020 due to COVID

The “backstory”

What complicates delinquent mortgage reporting in 2020 is the surge of mortgage forbearances entered due to COVID-19 CARES ACT.

Incorrect information and bad advise early in the COVID pandemic led to confusing a mortgage forbearance with a deferral. What also wasn’t clear was the impact on credit and ability to refinance.

Many owners did not know full “balloon” payments would be due at the end of their forbearance period and are in a difficult situation confused about what to do as their forbearance ends.

Could the delinquent property data be incorrect?

What the graph above doesn’t address is whether the spike in delinquencies could partially be due to incorrect credit bureau reporting of mortgages in forbearance.

For instance, ConsumerFinance.org advises checking your credit report if you have a forbearance as it should not be shown as a loan default;

“Servicers may report that your account is in forbearance. However, if you were otherwise current on your account and have received relief as defined by the CARES Act, your servicer or creditor is required to report your account as current”

What to do now?

As you can see, I’m a fan of analyzing data. However, when it comes to deciding the right time to buy or sell it’s important to look at the big picture of your goals. History has shown real estate values survive market changes in the long run. It’s all about what’s best for you.

Please contact me for a confidential consultation. We’ll look at the micro-market trends for your particular goals and location.

And if you know anyone facing problems paying their mortgage who wonders what to do now, it’s time to get help! For more information about short sales and options to avoid foreclosure, visit FightTheBank.org.

Be sure to subscribe for future blog updates. Let’s talk!

COVID-19 ignites Gladwyne luxury real estate market

Gladwyne luxury homes

What effect has COVID-19 had on Main Line real estate values? Today’s current market uptick can be easily attributed to pent-up demand combined with very little inventory and low interest rates.

However, a very different dynamic in Gladwyne luxury real estate has caused a significant increase in median sales price, and decrease in days on market.

The effects of COVID-19 luxury buyer demands for large, flexible homes with privacy and pools has literally flipped the Gladwyne luxury market.

Local news and statistical reports haven’t really told the story of what’s happening in Gladwyne luxury real estate. As always with statistics, results vary depending on what you’re looking at and how you’re analyzing data.

Gladwyne real estate market statitics

Maybe it’s the times, but conflicting reports on the coronavirus, the election, the economy and also real estate can be a bit much!

Quantum physics of market data

Reviewing statistics reminds me of the metaphysical, quantum physics concept that reality changes when observed. Or that one’s observation can change reality.

Especially in the luxury real estate market where one or two large sales in a small community skew results.

However, recent trends in Gladwyne are consistent and dramatic. Enough esoteric wanderings, let’s get to some understandable facts!

Gladwyne Luxury Real Estate

There are really 3 different market segments within any local area that includes luxury real estate; under $1M, $1M to $2.5M and above $2.5M. For this report, we are looking specifically at the $1M+ residential market.

Looking at the $1M+ and especially the $2.5M+ market in Gladwyne, a dramatic shift has happened.

As recently as 6 months ago, walkable locations on the Main Line, such as Wayne, Lower Merion, and Bryn Mawr were preferred by luxury buyers over large Gladwyne estate homes. Maintenance of pools, large 6+ bedroom homes with acreage that require ongoing maintenance were often deal killers. Buyers wanted easy access to transportation and shopping.

Gladwyne has become a desired location for newly mobile executives. The impact of migration from Manhattan to the Main Line along with demand from other areas such as Washington, DC has ignited Gladwyne luxury market values.

Buyers want expansive, flexible space, pools and tennis courts on a gracious private lot. A home that can function for the entire family, work from home and offers resort-style amenities.

Now the qualities that were seen as negative are competitive “must haves” for today’s buyers.

Let’s review the numbers. There’s clearly a dramatic increase in market values as detailed in this month’s Gladwyne Luxury Report:

As noted above, depending on how you analyze statistics, you might miss this story!

If you look at “absorption rates” the Gladwyne luxury inventory has been running at a 5-6 months which normally indicates a balanced market. That doesn’t reflect the hot luxury buyer activity going on right now, or the clear increase in median sales prices.

Greater Philadelphia Area Statistics

No one analyzes local data better than Drexel University economist Kevin Gillan. However as an example of how confusing statistics can be, a recent Philadelphia Inquirer article sourced Gillan :

“While home prices rose in Philadelphia in the second quarter of the year, prices of homes in the suburbs dipped.”

The “suburbs” includes several counties, and many communities. Again, it depends on what data you’re analyzing. Statistics really are only meaningful when looking at micro-market trends – what’s exactly happening in your local market.

The Bryn Mawr market snapshot below shows an example of the upward trends in Montgomery County:

Bryn Mawr Market Stats
Montgomery County median sales price $900K, up 33% over past 24 months

Contrary to Gillan’s analysis, Rittenhouse Square results from the exact same set of data shows a decline in median sales prices:

Rittenhouse Square median sales price dropped to $400K, down 27% over past 24 months

For insights into market trends in your area, contact Susanna for a private confidential consultation.

Dive deep into data detailed below, and please share your insights in the comments. Be sure to subscribe to receive future blog posts.

Detailed Market Reports

Gladwyne Luxury Market Report

Bryn Mawr Market Report

Villanova Market Report

Rittenhouse Square Market Report

Montgomery County Industry Watch Q2

Delaware County Industry Watch Q2

All data used by Gillan and in the reports above come from the same source, our local Bright MLS.