July 14, 2022
Main Line Bidding Wars Haven't Increased Prices
We've all heard the stories this year: Main Line listings that sell in a day well above the asking price; sellers who receive 30 offers on their listings; buyers who waive inspection and mortgage contingencies in order to win the bidding war, crazy love letters to sellers, etc.
There's currently only a 1.2 month supply of houses locally. There were 20% less listings and homes sold in the first six months of this year compared to last year. It's a good guess that these factors have increased appreciation on the Main Line this year. They haven't.
The chart below shows the first six months of median appreciation for the Main Line (including Lower Merion, Radnor, Tredyffrin, and Easttown townships). Statistics were obtained through Bright MLS. The median appreciation the first half of this year was 0.74%. The median appreciation for the first half of the year for the last five years averaged 5.8%. 2017 to 2021 median appreciation was 2.8%, 3.8%, 1%, 11.7%, and 9.9% respectively. Median appreciation is a good indicator of the market because it's the price that an equal number of homes sold below and above that price. This eliminates a few very expensive or low priced houses that can skew the statistics.
So after all the multiple offers, waived inspections, and bidding wars this year, the median sales price was flat. And the lowest in five years.
The chart below shows the average appreciation for the first half of this year vs. the last five years. The first half of this year Main Line home values appreciated 4%. The average of the previous five years during the same period was 6.4%. That means that this year appreciation was 37% less than the average of the last five years. 2017 to 2021 average appreciation was 4.1%, 1%, 2.8%, 10.5%, and 13.6% respectively.
Because there were 20% less homes for sale, the Days on Market decreased by 25%. It took the average listing 24 days to sell vs 32 days last year.
What Does This Mean For The Market?
Buyers who thought that Main Line prices increased 15-20% are mistaken. 4% appreciation this year is less than three of the last five years. And 0.74% median appreciation this year is - by far - the lowest in the last five years. The 1.2 months supply of listings is very low and will lead to multiple offers and waived contingencies, BUT, there should be less of it going forward. We're already seeing an increase in price reductions in the market, which we haven't seen this year until last month. Inspection contingencies are starting to be elected again in buyer offers (and accepted by sellers). It's still a strong seller's market, but buyers may no longer need to give up their right arm to land a house in the second half of the year.
The market is constantly changing. Contact me for more details and to help you navigate the market as is continues to shift.