Until recently Pennsylvania was doing alright overall in regard to house prices and the Philadelphia area was not suffering along with the rest of the country with sliding prices. Yes, prices had leveled, listings were taking longer to sell and there were less buyers willing to make a decision, but overall this was an adjustment the market needed, to cool off after a very active period, with buyers being pulled into the market early by offers of easy financing.
These buyers have now suffered, and there is a gap in the market as later buyers are not ready to buy due to the new financing requirements of many lenders that buyers need increased deposits to put down on their homes.
What this has done in the last one to two months has been to slow the market down locally even more and put pressure on sellers to reduce prices. We have seen this over a longer period in markets with very high inventories, such as Lower Merion where price cutting has been going on significantly over the whole summer. But only in the last two months with the financial crisis deepening has it really reached across the board to most neighborhoods. We are seeing sales off about 33% and prices dropping by 15-20% or more in different townships.
Buyers are reluctant to make offers, waiting for price reductions rather than making an offer. Those houses that are selling are the ones that require little or no work and have been well maintained. New construction sites are offering large incentives to buyers who are qualified and able to move ahead.
So if you are ready to buy and have financing lined up, check it and make an offer. Why check your financing? Because lenders are changing the rules all the time, if you were qualified a month ago or even two weeks ago, you may not qualify right now. I had a buyer of a listing of mine be rejected by the mortgage broker after being given a pre-approval letter the day before. So keep checking with your mortgage company and reach out to others to make sure you have options, there is financing available with good credit and if you have some money to put down, with FHA loans it can be as little as 3% this year, in January that will increase to 3.5%.