If you, or your clients, are looking to purchase a rental property, now is the time to do it.
Especially in Philadelphia and Pittsburgh. HomeUnion recently published a list of the best places in the country to purchase a rental home this season, comparing the prices in the summer and the winter. The site compared all single-family sales that cost $30,000 or more in May and June 2017 to October and November 2017.
“Median home prices drop substantially during the colder months, while rent losses remain marginal for landlords,” said Steve Hovland, director of research for HomeUnion.
In Philadelphia, the average winter price cost was $123,000, compared to $150,000 in the summer, a difference of 18 percent. “I would attribute price differences to supply vs. demand. For example, in the last spring market, we had many multiple offer scenarios on our listings where final sale prices ended up being far above the list price. That does not happen as much in the winter months,” said Chris Somers, vice president of the Greater Philadelphia Association of Realtors®. “One benefit of buying in the winter is often times, there is less of a chance for multiple offer scenarios, and thus buyers can have more negotiation leverage. Also, there can be less stress in making a decision, whereas in the spring market you might need to move super fast.”
In Pittsburgh, the average winter cost was $75,000, compared to $85,000 in the summer, a difference of 11.5 percent.
“What we typically see is houses that enter the market in spring tend to lean toward the higher range of a sellers wish list. The seller might say ‘Let’s list at the high range for 30-90 days and see what happens.’ Since spring and early summer tend to see bidding wars in certain markets, it’s the houses that don’t sell, that we see in the early fall lower or when November or December comes, they either take it off the market or lower just to sell quick. What we have seen is that if you do list in the early winter, you’re competing with the holidays and sellers will take that into consideration and price strategy on the lower of the range,” said David Dean, president of the Realtors® Association of Metropolitan Pittsburgh.
“I think the time is now to start buying. If you’re a first-time homebuyer, purchase that starter home and five years later, you have a solid foundation and equity to buy up. Interest rates are still quite low, but until new construction starts ramping up and homes start becoming plentiful, if you pass on this current market, you may be priced out of the market in a few years,” he added. “Pittsburgh has been consistently ranked one of the best housing and mortgage markets in the U.S. over the last eight years. For a period in Pittsburgh’s economic history, we had a fairly conservative market, just consistent. Now, we have a huge influx of high tech companies and with that, we are seeing market values rise considerably based on where the buyers are coming from. With this influx of new buyers and low inventory, I imagine the challenges for the real estate industry in Pittsburgh will be considerable.”