This is precisely how some local real estate agents describe the state of the market over the past year.
Thinking of purchasing a new home and taking advantage of all-time low-interest rates? Turns out, in the South Jersey and Philadelphia region, inventory is scant and there are lots of others on a similar search.
“I’ve never seen anything like this before,” said Anne Koons of the dramatic changes and soaring demand for real estate. Koons is the number one producing agent with Berkshire Hathaway HomeServices Fox and Roach, Realtors in Cherry Hill. “There’s limited inventory—particularly in the $200,000 to $600,000 range, no new construction to speak of in South Jersey and interest rates have never been this low,” she said.
A real estate agent for over 36 years, Koons explained that currently, buyers can obtain a jumbo mortgage from 2.75 to 3 percent and a conventional loan from 2.5 to 3 percent. “I thought when they went to 6 percent, that was a bargain,” said Koons, 68, a lifelong South Jersey resident who lives in Voorhees and grew up in Vineland. “I sold homes when the rates were 10 percent,” she said, attributing the current scenario to numerous factors, including the pandemic.
According to Koons, the shortage of inventory began in June or July of 2020, after the country’s initial lockdown. People in large numbers suddenly wanted to flee from cities and tight spaces. A lot of people from New York, Center City Philadelphia, Connecticut and North Jersey began seeking residential real estate in South Jersey. The result: an abnormally large proportion of buyers vying for an extremely small amount of inventory. It was all about supply and demand, quickly transforming to a seller’s market. And prices in our region, underscored Koons, are significantly lower than the New York market. “People wanted land, they wanted bigger homes; home offices were important,” said Koons, of the shift and desire for space in the suburbs. In addition, a significant portion of businesses went totally or partially remote.
Koons sells properties predominantly in Camden, Burlington and Gloucester counties as well as Center City and the Jersey shore. Most of her business is residential, but she also manages some commercial properties. Over the past year, she’s also observed a trend toward people moving to the shore in towns such as Ventnor, Margate, Longport, Avalon, Ocean City and Stone Harbor. Not only are residents from South Jersey and Philadelphia making the shore their permanent, year-round residence, but also a significant number from New York, North Jersey and Connecticut. Rather than purchasing a property in the Hamptons on Long Island, people began flocking to the Jersey shore. “People got much more for their money down here,” said Koons, adding that some area residents also moved to Florida. “New Jersey leads the country in real estate taxes. People are leaving because of that.”
Before the pandemic, Koons typically had about 15 to 25 homes in her inventory at any given time. Currently, she has four. In just about every sale, there is a bidding war, often with 20 offers. The result has been head-spinning, to say the least. In most cases, buyers are paying from 10 to 20 percent over asking price. This has become the “new normal.” In the past, she explained, the listing price would be the starting point of a negotiation. Sellers would expect a lower offer and negotiations would proceed from there. Today, it’s the polar opposite. “I recently listed a house in Cherry Hill for $395,000,” said Koons. “In two days, it sold for $450,000.” Yet the South Jersey/Philadelphia region is not the only place where supply and demand have put the seller in the driver’s seat. “I know people that bought a home in Palm Beach, Florida over a year ago for $4 million,” said Koons. “Today, they could sell that home for $8 million.”
Koons did point out that although there is limited inventory in Philadelphia in the $600,000 to $900,000 range, once you go over $1 million, there is more to choose from. And although many want to leave the city, others want to transplant themselves here as it’s much more affordable than New York.
In addition to the short supply of homes for sale, Koons noted that rentals are also a challenge. This is particularly evident at the Jersey shore, where prices for this rare commodity have increased dramatically.
Koons cited another recent example of a three-bedroom, one-bath rental she listed in Northeast Philadelphia. “Within 15 minutes, I had 25 inquiries,” she said.
Although inventory is very low, Koons is quick to caution buyers from acting out of desperation. She’s seen people waiving home inspections and appraisals, something she advises strongly against. All the more reason, she said, to deal with an experienced, knowledgeable real estate professional. “If you’re going to buy a house today, you should work with someone who knows the area, is experienced and has your best interests in mind,” said Koons. “The same thing [is true] when you go to sell. Price is important, but it’s not the only factor.”
Sam Lepore of The Sam Lepore Group-Keller Williams Real Estate in Moorestown couldn’t agree more. In today’s market, he underscored that it’s more important than ever to choose a seasoned real estate agent with a proven track record.
Lepore, 48, has been a real estate agent since 2007. He works primarily with residential properties ranging from $800,000 to $3 million throughout Burlington, Camden and Gloucester counties with a significant niche in Moorestown. He understands the delicate balance of skills required in any transaction. These include an understanding of real estate law, mortgages, construction, inspections and the art of negotiation. Prior to becoming an agent, Lepore worked in the mortgage business and as a home builder, an experience that has strengthened his competitive edge in serving clients.
A South Jersey native who resides in Moorestown, Lepore acknowledges the extraordinary state of the market. “We haven’t seen anything like this,” said Lepore. Although in 2007 and 2008, it was a great market, he noted that inventory levels have never, ever been this low. Prior to the pandemic, he described the market as flat to normal. Then in March 2020, when everything was in lockdown, the market followed suit. “About a month later, things took off like wildfire,” he said. And they haven’t slowed down. In 2020, Lepore had the highest number of sales since he’s been in the industry. In his real estate group—comprised of 11 professionals, eight of whom are agents—sales were up about 25 percent.
Though real estate sales may have been booming, some area residents and businesses were struggling. Lepore didn’t miss an opportunity to give back. In December 2020, he helped some community members by paying for their groceries at Ralph’s Market in Moorestown.
Lepore explained that real estate agents in New Jersey have been showing houses throughout the entire pandemic. This was not the case in Philadelphia, where showings were not permitted for a period of time. In both regions, strict health and safety measures were in place including the wearing of gloves, masks and sanitizing of surfaces.
“For sellers, it’s been great,” said Lepore. “Most of the time, we’re able to get them over asking price (averaging from 10 to 20 percent). For buyers it’s been tough, losing out on the homes; there just aren’t enough of them.”
Lepore attributes a shortage of sellers to numerous factors, including that people haven’t been comfortable showing their homes during the pandemic and uncertainty about the economy and job market.
Clearly, since working and attending school remotely has been the norm for many for over a year, there’s been much greater attention to the home environment. “People are staying put and improving what they have,” said Lepore. “They might be putting in a pool or redoing a kitchen. That’s why contractors are so busy now.”
Lepore has also observed a continued exodus from New York and Philadelphia to South Jersey, flooding the regional market. “You can get something here for half the price than in New York,” he said.
With an influx of buyers and not enough sellers, there may be 10 offers on the table for one property. In fact, in 90 percent of Lepore’s transactions, there are multiple bids. “We have to make our offer stand out,” he said.
Suffice it to say, there’s a lot more involved in selling and buying homes than one might think. “If you don’t align yourself with a true professional, you are doing yourself a great disservice,” said Lepore. Not only does an agent need to know how to navigate the market and show a house, but they must also be adept at completing the transaction. “You have to know how to talk to people and communicate properly,” said Lepore. “You need good negotiation skills to get a transaction to the closing table.”
Although Lepore can’t predict the future, he doesn’t see the market slowing down for at least another year. With COVID restrictions relaxing and more people getting vaccinated, he believes this could help with inventory. “If so, there might be a chance to level the market,” he said.