Having watched buyers and sellers in all kinds of real estate markets here in Philadelphia – both a buyer’s market, and a seller’s market, I would like to cough up my two cents on what I see is happening now in the Philadelphia condo market as we start the new year (2008).
Let’s begin with the obvious. Buyers believe that sellers are nuts, and sellers believe that buyers are just plain crazy. And realtors are lunatics. I can see that. Buyers will react to what they believe to be a weakened market in a number of ways. Not only will they tend to “low ball”, but their behavior as far as location and condition are altered as well.
1) Low-ball offers become the norm: No big surprise here. The days of multiple offers on the same property have passed. Not only are there fewer buyers in the market, but the motivation levels of those buyers are not as prevalent. We just don’t see that wide-eyed frenzy of “Gotta’ have it”. Buyers will often question how long a property has been on the market, and bid accordingly. Sellers should be less offended and less surprised by such behavior.
2) Condition Rule: Buyers become much greedier in their desire for something that shows well, and is in move-in condition. Why should they settle for something that needs work, when possibly they can now move up into something newer that shows really well for what they believe to be the same price? Rittenhouse Square condos, say, that do not feature a strong showing ability may be looked over. There is more product on the market, and a lot more substitutability, so those units that are a bit worn, are going to have to be priced really well to garner an offer.
3) Location becomes more important: I witnessed this firsthand back in the early 1990’s. In a perceptually weakened market, the “lesser” locations will be the first to drop off as far as prices and traffic are concerned. A buyer’s desire to “pioneer” an area will lessen as he or she may believe such a tactic is more risky in a less “demand saturated” market.
Condos in Philadelphia may be perceptually “off”, as far as sales and demand is concerned. Sellers need to be aware of this new view that buyers hold, and act accordingly. Waiting for the multiple offer situation to come knocking on their door might be best invoked by rubbing a lamp. However, what doesn’t require one to “rub a lamp” is the notion that a Philadelphia condo that shows well, and is priced well, will still sell well. Take that to the bank.www.CenterCityCondos.com
Prudential Fox and Roach REALTORS®
530 Walnut St., Suite 260 Philadelphia, PA 19106