By: Andrew D. Otts
Regional Real Estate on the Rise Despite COVID
When Nicole Jackman and her husband first saw the 127-year-old Victorian home in Coraopolis, she was immediately taken by its beauty, so they pounced on the opportunity to purchase the property, even though the CoronavirusCOVID virus was raging.
“We fell in love with it just driving by one day. Happened to go on the market the next day and we came in. Put in our offer… boom, easy peasy,” recalled Jackman, who closed on the property on May 7 and was moved in by the 23.
“At that point, we weren’t even masking yet, fully. So, it was just us and our agent, the three of us, and we just distanced. The closing was in full mask with hand sanitizer and distancing… that’s about the only time we had to see anyone in person,” Jackman said.
At a time when small businesses and large corporations alike are struggling to adapt to the pandemic, the real estate market in Allegheny County and the surrounding region appears to be thriving. Fueled by low-interest rates, tax cuts, and a favorability of working from home, many realtors and prospective homeowners are using the pandemic as an opportunity to purchase or sell property.
“There are plenty of young adults that have the ability to purchase their first home due to the low-interest rates,” said Evan Krahe, a real estate agent with Howard Hanna based out of Pittsburgh’s North Hills neighborhood. “Instead of spending $1000-1200 a month on an apartment, it makes more sense to invest in a home. It may not be their forever home, but it’s something they can build equity in.”
Since the start of the pandemic, the local real estate market has seen a boom in homebuyers looking to purchase property for the first time. But despite attractive interest rates, competition is stiff, and the market is inflated.
In the last year alone, home values in the Pittsburgh area have climbed nearly 6.3% according to data compiled by Zillow, creating a scenario in which homebuyers are paying more for property, but with lower mortgage interest rates.
“With the lack of inventory, we’ve seen a lot of buyers overpay for properties because of how competitive [the market] is. That being said, the biggest concern would be the lack of initial appreciation, or return, in such a large investment,” Krahe said.
Despite the price tag on some of these properties, there appears to be no shortage of potential homeowners looking to close a deal. Mauricio Gonzalez, a mortgage representative with PNC Bank who works out of their Hampton, Lawrenceville, and Shadyside branches, was surprised to get so much business, especially during the pandemic.
“Personally, it’s been the best year ever so far… I almost doubled my goals I have for this year. You know, a year today compared to last year, I’m way past that point,” Gonzalez said, describing how low-interest rates have boosted the real estate market. “It caught like wildfire, as soon as we saw that the rates started to drop record low, everybody kind of started getting pre-approval, then everybody started to refinance their mortgages.”
According to Gonzalez, a 30-year fixed rate on a mortgage loan hovered around 4.5% this time last year. Those rates have now dropped as low as 2.5%, prompting more of his clients to take out a new mortgage or commit to a refinance. This wasn’t the case in early March when businesses began shutting their doors and lockdowns were put in effect across Pennsylvania, however that quickly changed in the summer.
“As soon as we hit around July, August, it just kind of went crazy… we saw a huge amount of people getting pre-approved, buying houses, going into contracts, and the biggest feedback is houses didn’t last. So, if it was a good house, and it was priced well, it would just not be on the market for more than a day,” explained Gonzalez.
With so many potential buyers looking to take advantage of the low-interest rates, realtors are being flooded with offers for their properties. Beth Danchek, a realtor with Coldwell Banker and the head of the Beth Danchek Group, has noticed a considerable increase in offers over the last few months.
“We are seeing an amazing amount of multiple offer situations, especially in the price range of $100,000 to $350,000,” Danchek said, who noted that from March to May the industry almost came to a grinding halt. “When we were shut down for two months…we were doing virtual showings, but there was not a whole lot of activity. We weren’t in houses, we were not in closings, we were still trying to get things closed.”
The allure of low-interest rates continues to attract buyers, and despite setbacks and delays, those in the industry like Gonzalez are confident that the market will continue to grow in the coming months.
“This year, obviously, like everything else has been very different. I feel like I’m busier than ever right now with purchases… it’s really aggressive and very competitive, but it’s good to see that definitely more people are looking to buy right now,” said Gonzalez.