The pandemic has changed many things in our daily lives, not the least of which has been the housing market.
Joanna Papadaniil, who works for Berkshire Hathaway Home Services in Mullica Hill, has been a realtor for over 16 years, explains the state of the industry.
“The housing market in general has been experiencing significant growth, mainly due to factors such as the new-found ability for individuals to work remotely, low interest rates, and the state of housing inventory in a pandemic market.”
Papadaniil explained that the unique geographical location of this area has played a significant role in the changes to the local market.
“Our area specifically has been saturated with buyers searching for more land, open space, and a suburban setting. Most buyers in the tri-state area are considering South Jersey, among other reasons, because of our proximity to the Jersey beaches, while still [being] close to metropolitan areas.”
As the laws of economics dictate that high demand brings higher prices, it’s easy to surmise who has the most to gain. Nancy Kowalik of Nancy Kowalik Real Estate Group in Mullica Hill confirmed.
“In general, nationwide, it is a seller’s market. What that means is there is not enough inventory to meet the demand of buyers,” she said.
“Historically low interest rates have made money more easily available to more people, causing an influx of new home buyers. Plus, it is very expensive to build, a condition which is exacerbating the current inventory and pushing prices up.”
“A perfect example is [a home in] in Mullica Hill. This property was bought in July 2017 for $559,673 as a new construction. The home did not have any additional upgrades. My brokerage sold it in February of 2021 for $650,000,” she illustrated.
Kowalik goes on to explain that the home was originally listed for $620,000, and that it went under contract in less than 10 days.
Papadaniil had similar stories.
“One specific example is a home in Woolwich Township which entered the market on a Sunday and within 24 hours had 30 showings scheduled. By day two, the property already had 10 offers and by day three, 22 offers.”
Kowalik, who has been in the business since 2005, explained that our area’s close proximity to the new Inspira hospital and Rowan University created a stream of new residents prior to the pandemic, causing a lack of inventory even before it hit. And in addition to our area being desirable, the dangers of the pandemic caused an exodus from the urban environment.
“Many wanted to move to larger homes in more rural or suburban areas where there aren’t as many people as in the cities, as the pandemic had higher concentration of those infected with the virus,” Kowalik said.
As depicted by the example of the home in Mullica Hill, many sellers are wondering how they should be pricing their homes.
“The price of the properties entering the market today should still be fairly priced,” began Papadaniil.
She confirmed that buyers seem to have the mindset that they should bid over the asking prices, and subsequently, the price elevates as multiple offers take place.
“If the buyer is taking on a mortgage to facilitate the sale, the property must still appraise for contract value so that the sale can be completed. Although most professionals are adding appraisal clauses and waivers, at the request of the buyers and if the contract permits, the parameters must still remain logical in order to keep the markets fair for the neighborhoods and consumers,” she explained.
Her fellow agent Kawalik agrees.
“Homes should be at a price where they will appraise. When a real estate professional gives advice of appraisal value to a seller, they should heed their advice. Of course, bidding wars happen, which does lead to home values arriving at a new market price. However, when pricing a home, be sure that your home has the same, or close to the same features as the comparable homes they are basing their asking price [on].”
“Interview your local professionals and go with the person who understands your hyper-local market and gives you the right advice on staging your property so that it makes the best first impression to the potential buyers. Hire a professional who will properly market your property so that it gets you the best price, terms and conditions, and will also continue to market your property until the home is sold.”
“Marketing is the key in this business and makes a vast difference in the outcome. Marketing the property throughout the entire process also protects you in the event that something unforeseen happens in the sale, and you have back-up offers, just in case,” Kowalik continued.
Based on the today’s rapid transactions, Papadaniil also offers sage advice to sellers.
“Be certain that you are ready to move and make sure to secure options as to your next housing destination, as the offers will make their way to you in a very quick manner and being prepared is absolutely imperative.”
What about those who desire to buy in the area?
“My advice to those buyers looking in the area is to be certain of your price range, financial limit, and comfort level,” began Papadaniil.
“If you are not in a dire situation to purchase a house, use this time to prepare financially and to organize time frame and parameters.”
Kawalik said that it can’t hurt to have a conversation.
“Interest rates are low, and this is a great area in which to live. A good agent can give guidance on this as every situation is different. It costs you nothing, but you have to have that candid conversation.”
One tactic that some buyers are employing to gain an edge is to forego the home inspection. Papadaniil and Kowalik offer alternative guidance that can better protect the buyer.
“In order to present a stronger position to the seller, the buyer can note that the home inspection will be conducted for informational purposes only and can place a monetary cap on repairs with a negotiation clause to follow,” Papadaniil advised.
Kowalik echoed this same cautious sentiment.
“I always advise buyers to get the home inspection for their own due diligence,” she began.
“They can choose to waive the repairs, but they can also place a limit on the amount that they can afford or are willing to pay for repairs. That way they are not blindsided by any latent defects in the home, and they are not locked into a home that they cannot afford to repair once it’s theirs.”
Megan Flinn is Vice President of Residential Lending at Franklin Bank, offering branches in Woolwich Township and other locations throughout the area. With housing prices so high, she wants to make sure that borrowers are careful and pragmatic.
“When applying for a mortgage be realistic about how much to borrow and make certain the loan amount fits the budget.”
To make the process smoother, she advises that applicants have all documents in order, as the lender needs to have a comprehensive understanding of their financial situation before a mortgage can be granted.
Proof of income, assets, employment status and identification are basic documents that will be required, and the down payment amount, credit score, debt-to-income ratio and collateral are also examined and factored into the loan approval.
Although this may seem complex and harrowing to a first-time home-buyer, part of her job is to assuage any apprehension or anxiety about the process.
“The lender will guide the applicant through the application process and will determine the best mortgage product for the situation. Please keep in mind that local banks may offer unique lending programs with personalized service,” she emphasized.
What about those who wish to stay in their home, but are considering refinancing due to low interest rates?
“The homeowners who purchased their home with the intention of staying for a significant amount of time should absolutely consider refinancing, especially those who would like to make home improvements and have equity in their home,” said Papadaniil.
“This would be the best time to take the opportunity, as the appraised values are at an ‘all time high’ in our area,” she added.
Again, these seasoned professionals offer similar recommendations to the community.
“I advise my clients to speak with a mortgage professional to make an educated decision. If you believe that your property value has gone up and you may have more equity in the home, it’s worth the inquiry,” began Kowalik.
“You may be in a situation where your new equity increase can take you out of the PMI/MIP (mortgage insurance) payments, which could make a difference in your monthly payments,” she concluded.
By Colleen Woods-Esposito