Local buyers feel the squeeze of tightening housing market
Updated: Sep 10, 2021
By Chadwick Dolgos
Anyone who has tried to purchase a home over the past year already knows how competitive the housing market has been. With sellers receiving well over the asking price, and listings only lasting on the market for an average of two to three weeks, first-time homebuyers are feeling discouraged and nearly giving up.
“There is hope for buyers out there,” said Melissa Dunham, real estate agent at Howard Hanna in Moon. “I can confidently say that we are now seeing people go in under asking and still getting it.”
The pandemic produced a strong seller’s market early on, which is defined by limited inventory coupled with increased demand for housing. As employers started recognizing the benefits of working remotely, people began moving out of the City of Pittsburgh, no longer having to commute to the office for work.
Another major contributing factor to the spike in demand for housing is low interest rates being offered on mortgages. The Federal Reserve began lowering interest rates in March 2020 to make it less expensive to borrow money in response to the economic slowdown caused by COVID-19. The average mortgage interest rate dropped below 3% for all main loan types.
As more people began entering the housing market in search of homes, the average cost of homes in areas west of Pittsburgh increased.
The average cost of a house in each of Gazette 2.0’s coverage areas has increased, but not as rapidly in some municipalities as others. For example, the average cost of a house in McKees Rocks is 33.7% more than it was in July of last year, according to data from online real estate service site Rocket Homes. Robinson Township homes only saw a 4% increase over the past year.
“A lot of homes in McKees Rocks are investment properties; people will flip them to make a profit,” Dunham said. “They’re rundown, cheap to buy, and easy to flip, so people can raise that price exponentially.”
The Robinson housing market consists largely of newer homes that do not require many upgrades.
“A lot of [Robinson] is new development and there’s not much room for inflation of price,” said Dunham.
Michael Cowden, the owner of Crowden Creek Realty headquartered in Robinson, recognizes that the current market is a seller’s market by definition, but notes that buyers who take advantage of the low-interest rates are still getting a great deal.
“I don’t know if I would say that houses are expensive,” said Cowden, who has more than 20 years of experience in real estate. “Imagine someone saying there’s limited inventory, but we’re going to give you the best deal ever.”
His advice for first-time homebuyers: Finance.
“The person that benefits is the person that’s financing,” he said. “They’re going to save themselves probably $70-80,000 on that house over the life of a loan.”
However, while low-interest rates are certainly attracting many new buyers to the housing market, Dunham urges all homebuyers to proceed with caution.
“Do not make an impulsive decision just based off getting that interest rate, or getting that deal,” she said.
Dunham explained that the chaos experienced in the housing market early on caused both buyers and sellers to engage in risky behaviors such as overpaying tens of thousands of dollars on houses that may never return investment and skipping out on inspections.
“One of the biggest things buyers kept doing was dropping inspections,” said Dunham, who explained that sellers shouldn’t take offers absent inspection because they can be held legally liable for any work performed that wasn’t disclosed to the buyer.
Both Cowden and Dunham agree that the housing market largely enjoyed by sellers four to five months ago is beginning to balance out, though neither is sure if or when it will return back to a buyer’s market.
“I don’t know if it’s changing to a buyer’s market, but both parties are doing OK right now,” Cowden said.
While many people purchased homes well over asking price during the height of the seller’s market, Dunham is hopeful the value of the homes will increase over time, allowing buyers a return on their investments.
“Where we are in the Pittsburgh area, there are a lot of businesses and new developments coming, which will raise the price on homes over time,” she said.