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Homebuyers Face Bidding Wars on Scarcer-Than-Ever U.S. Listings

Discussion in 'Real Estate & Other Investments' started by Scorpio, Mar 18, 2017.



  1. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    Homebuyers Face Bidding Wars on Scarcer-Than-Ever U.S. Listings
    by
    Prashant Gopal
    March 17, 2017, 4:01 AM CDT March 17, 2017, 11:53 AM CDT
    • Real estate frenzy spreads to ‘unlikely’ cities in heartland
    • Rising mortgage rates and prices add sense of urgency
    The winning bidder of a Grand Rapids, Michigan, house has been offered almost $20,000 to hand his purchase contract to another buyer. An agent in Nashville, Tennessee, got a property for his client by cold-calling local homeowners. Near Columbus, Ohio, it took a teacher five tries to secure a deal.

    It’s the 2017 U.S. spring home-selling season, and listings are scarcer than they’ve ever been. Bidding wars common in perennially hot markets like the San Francisco Bay area, Denver and Boston are now also prevalent in the once slow-and-steady heartland, sending prices higher and sparking desperation among buyers across the country.

    “Homebuyers are going to find this spring that, in a lot of markets, the inventory of homes priced and sized at price levels they were hoping for will be very limited,” said Thomas Lawler, a former Fannie Mae economist who’s now a housing consultant in Leesburg, Virginia. “Unlikely places are getting significantly tighter.”

    Buyers are clamoring as an improved job market and growing confidence in the economy collide with rising mortgage rates -- yet there’s little new inventory for them to purchase. Housing starts remain well below levels before the last recession, and builders have focused on higher-end properties out of reach for many people. Homeowners have become even more reluctant to sell because, after all, where are they going to move?

    The three months through January had the fewest homes on the market on record, according to an analysis by Trulia. Prices jumped 6.9 percent in January from a year earlier, the biggest increase for any month since May 2014, data from CoreLogic Inc. show. And homes sold faster in the first two months of 2017 -- spending an average 58 days on the market -- than at the start of any year since at least 2010, according to brokerage Redfin.

    [​IMG]
    Homes are moving fastest in Denver, Seattle and Oakland, California -- areas where heated competition have become status quo in recent years because of soaring job growth, particularly in the technology industry. But fourth on Redfin’s list is Grand Rapids, Michigan’s second-largest city, in a reflection of strengthening employment across even the slower-growing center of the country. Buyers are also struggling in cities such as Boise, Idaho; Madison, Wisconsin; and Omaha, Nebraska.

    Cash Offer
    Grand Rapids -- a diverse economy underpinned by health-care, technology and manufacturing companies, with a 3 percent unemployment rate -- has seen a 27 percent drop in homes for sale in the past year. One listing recently attracted 40 bids.

    Competition is so extreme that real estate agent Tanya Craig, working with an out-of-town couple six months into a search for a home near their grandchildren, had to get creative. She called an agent representing a buyer who just signed a contract for a $350,000 house and offered about $18,000 in cash if her clients could purchase it instead. Craig, an associate broker with the Katie K team at Keller Williams, is waiting to hear back.

    “People need to get their houses on the market, but they’re gun-shy,” Craig said. “Unless they know where they want to go, everyone is hesitant.”

    While sellers are losing their nerve, buyer confidence has climbed since the November election, hitting a new high in February, according to Fannie Mae, which began its sentiment index in 2011. The unemployment rate is at 4.7 percent and business confidence has soared amid President Donald Trump’s vows to lower taxes, increase infrastructure spending and trim regulations. Rents are also at a record, making ownership more attractive.

    Rising Costs
    Would-be purchasers have a reason to rush as rising borrowing costs -- and prices -- close off opportunities. The 30-year fixed mortgage rate has jumped by more than half a percentage point since the election. The Federal Reserve this week increased its benchmark interest rate by a quarter point and signaled it will do so two more times this year, boosting borrowing costs from low levels that have been in place for almost a decade.

    The average 30-year rate probably will climb to 4.7 percent by the end of 2017, from 4.3 percent this week, and could reach 5.5 percent next year, said Lawrence Yun, chief economist of the National Association of Realtors.

    Higher mortgage costs could eventually shrink the pool of buyers able to qualify, but it may also discourage homeowners from selling because they might have to take out a more expensive loan to purchase something else.

    “In today’s market, many buyers think the trough in rates is over,” said Sam Khater, deputy chief economist at CoreLogic. “If you don’t get in now, it’s just going to be worse later. Rates will be higher, prices will be higher and maybe inventory selection will be lower.”

    Older people who may typically move are choosing to stay where they are, Chris Herbert, managing director for Harvard University’s Joint Center for Housing Studies, said in an interview Friday.

    “One factor is that you have the baby boom generation on its way to being 65-plus,” Herbert said. “They’re moving less so you have fewer homes on the market. That could be part of the glue keeping the market stuck.”

    Price Gains
    There are are pockets of the country, such as Miami and Manhattan, where inventory has climbed amid new construction and less interest from foreigners, and some regions have yet to experience the job gains that fuel housing demand. Yet other cities that haven’t had strong price gains in recent years are now seeing a big jump.

    In Philadelphia, prices for single-family houses jumped 11 percent in the fourth quarter from a year earlier, compared with a gain of less than 5 percent at the end of 2015, according to Kevin Gillen, a senior research fellow at Drexel University.

    Buyers are making full-price offers before properties have even been listed, said Mike McCann, associate broker with Berkshire Hathaway HomeServices Fox & Roach.

    “We might end up with fewer transactions in 2017 because we don’t have inventory," McCann said. “Thirty-five percent of my properties are selling within the first week or two of hitting the market.”

    Calling Owners
    Rich Ramsey, an agent with the Helton Group at Keller Williams in Nashville, has been knocking on doors and working the phones. When he heard from a family frustrated after losing out on two homes they liked in a townhouse development in the city’s Midtown neighborhood, Ramsey started calling owners in the area.

    “I found someone who had considered selling,” Ramsey said. “I asked if they had a price in mind and we started negotiating.”

    The family purchased the three-bedroom property in January for a price in the low $400,000s, Ramsey said.

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    For some buyers, patience and persistence can pay off. Jessica Streit, a 42-year-old teacher and mother of two, has been searching for months for a home in Sunbury, Ohio, north of Columbus. She lost three bidding wars and even went into contract on a home, only to back out after an inspection revealed some expensive problems. Last week, her fortunes changed -- she signed a $136,000 deal for a two-bedroom condominium with a finished basement.

    “We were absolutely shocked to get this one,” she said. “We had an appointment to see a rental house Saturday because we thought that would be our next direction.”

    https://www.bloomberg.com/news/arti...dding-wars-for-record-low-supply-of-u-s-homes
     
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  2. luckabuck

    luckabuck Gold Member Gold Chaser

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    Interesting news for potential sellers. Now just to see if the fragile economy supports the jobs to pay for them. Fannie and Freddie are on the ropes with trillions of dollars in subprime mortgages. Tax payer will have to bail them out when they collapse.
     
  3. nickndfl

    nickndfl Midas Member Midas Member Site Supporter ++

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    The Treasure Coast north of Palm Beach and south of Cocoa has always been more affordable than Miami/Ft.Lauderdale/Palm Beach. There are still some 2-bedroom cracker boxes for $150k, but who wants to live in one?

    The big advantage on the TC is you can still build brand new homes on a 1/4+ acre vacant lot NOT in an HOA. HOAs can be great, but they are usually more expensive and are on zero lots (smaller). There are about 1200 lots available for sale and < 100 new homes. There are another 1000 resale homes available.

    A nice, new 2200 sq. ft. 4/2/2 used to top out at $250k here. Now they are building more 4/3/3 and topping out around $350k. In South Florida that same new construction would be $450k+ and in an HOA because there are no more vacant lots. South Florida has the Atlantic Ocean to the east and the Everglades to the west.
     
  4. southfork

    southfork Mother Lode Found Mother Lode

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    This is only in select few areas, overall there are plenty of houses for sale, NAR has been caught many times lying about how great the market is and the shortage of homes to try to force people into a buying frenzy , many realtors are as dishonest as car salesemen
     
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  5. ErrosionOfAccord

    ErrosionOfAccord #1 Global Warmer Gold Chaser Site Supporter ++

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    Should be plenty of subprimes coming available for loans they can't afford since the credit bureaus are dropping liens and hospital bills from the formula.
     
  6. mayhem

    mayhem Другая перспектива Silver Miner Site Supporter

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    I'm south of nick in PBC and there are still plenty of 3/2/2', 2,400 sq.* available down here some on 1.25 acres. They are bank /hedge fund owned, and are rented. they keep just enough on the market to support a $325-$375 price. There are some 1,800 sq's available for $250+.

    The banks/hedge funds smartened up 5 years ago and put all their foreclosures into rentals. So while there is a market it's still even price wise. Some people are on 6 month leases, allowing the owners to toss them quickly and hang out a for sale shingle.

    * under air.
     
  7. nickndfl

    nickndfl Midas Member Midas Member Site Supporter ++

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    I was looking in Loxahatchee and Jupiter Farms before I built my latest in St. Lucie. Jupiter Farms pricing is > $100k for the 1.5 acre lot while Loxahatchee is is around $75k. The problem with building those places is even after you spend double or more for the lots is it takes another $40-$50k at least to prep it because they are 1+ acres. The extra space is nice, but then there is maintenance and taxes too.

    I scouted out a lot with only one neighbor to the west, and all vacant lots to the east. Across the street to the south is an undeveloped 15 acre park and behind us we have some houses, but are separated by a wide drainage ditch that sometimes has water. I don't have the added maintenance or taxes, but have all of the utility of a 1+ acre lot.

    I also just bought a nice lot on a 100'+ wide canal in back, huge lake in front and small canal on one side with a neighbor. The other side has a vacant lot that is part of a developed double lot where the house is on the far side. My wife likes our current location better believe it or not.
     
    Last edited: Mar 19, 2017
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  8. JFN111

    JFN111 Silver Member Silver Miner

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    We have been seeing that here in the Twin Cities for moderately priced houses. <$225) We put the house on the market on Thursday, hold an Open on Saturday and have multiple offers by Sunday.
    I had buyers through an open yesterday telling me they have made offers on up to 6 homes and got out bid each time. 17 people through an open last Sat. and 13 through the one yesterday.
    I'm doing an open today on a $600,000+ house in a desirable suburb. I don't usually work this price point so I'm curious to see how many show up.
     
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  9. ErrosionOfAccord

    ErrosionOfAccord #1 Global Warmer Gold Chaser Site Supporter ++

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    As rates go up prices will come down.
     
  10. nickndfl

    nickndfl Midas Member Midas Member Site Supporter ++

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    Here they build to a price point. This is my 5th new construction primary residence since 1992. I have also built other spec homes to flip. My previous cost $75 sq. foot under air in 2004 plus the property which I already owned. This last home cost around $105 per sq ft under a/c plus the property. Completed prices start at $125 per sq. ft under a/c @ 2000-2200 sq ft. including the lot.

    As land becomes more scarce with build out and prices increase, builders are constructing smaller homes < 1500 sq ft under a/c to satisfy a lower price point while others select better quality lots and build 2400+ sq. ft homes. There are a few >3000 sq. ft. under a/c plus pools, but that is topping out here.

    This next 5 years will be a last opportunity to construct a new home outside of an HOA in South Florida at an affordable price. Anything else will be in an HOA or a knockdown.
     
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  11. JFN111

    JFN111 Silver Member Silver Miner

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    Just an update. I had about 9 people through the Open today. 3 of these were neighbors so only 6 serious buyers.
     
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  12. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  13. southfork

    southfork Mother Lode Found Mother Lode

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  14. dacrunch

    dacrunch Gold Chaser Platinum Bling

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    "Scarcer-Than-Ever U.S. Listings"

    imho, it's been yet another "tranfer of wealth" from "working stiff mortgage-paying citizens" to "Investment Brokers"... who then rent them out... to those who will never afford to become "home-owners"... (Even though that is a false term... If you come up late on mortgage or tax payments, you find out very quickly that you never "really own" your home...)
     
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  15. Hystckndle

    Hystckndle Daguerreotype Fanatic Site Mgr Site Supporter ++

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    20170423_115646.jpg Townhouses.
    3 levels
    " starting " at 250
    They are everywhere.
    20170423_115535.jpg
     
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  16. gtopillado

    gtopillado Seeker Seeker

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    Housing cost is crazy where I live. Seems normal to sell house 20%+ over asking price. Some owners are under bidding there homes to start a bidding war like an auction. Crazy
     
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  17. dacrunch

    dacrunch Gold Chaser Platinum Bling

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    Add an easy $500-$800 / month in association fees... plus "additional one-time (more like "one-time each year) "hidden costs.

    Leaky roof? (Like me after Wilma)....
    Think you can climb a ladder to the roof and spread around some tar? And "save" your "home" from rot & bugs? - Think again... "forbidden to take action in your own hands - the associations' "experts" are visiting all the claims"...

    So, my $280.000 townhouse got green-moldy-drippy ceilings... had to spread plastic sheeting above the bed....
    ... and it took them THREE YEARS to FINALLY get to my townhouse. Of course, the "housing crash crisis" was in full bloom by then... and I was one of the "lucky ones" who found a buyer.... for $85k.

    $205k "less" than it was "worth" before Wilma - of even AFTER Wilma, if I hadn't been prevented from climbing onto the roof myself...

    "Oh, so you lost your down payment", you say?

    Nope. I pay cash for all my property. (Only "good" piece of news on this "deal" is that I'd bought it for $90k... so those were "speculative paper "paper dollars" that I "lost"...
     
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  18. davycoppitt

    davycoppitt Seeker Seeker

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    The wife and I are starting to look at options for selling our house and moving. Moving out further from the city for a few years to let things die down or have my buddy who is an agent find us another steal. We bought a year ago and since then the area has exploded. Right now we are just looking at our options. We would have to stay in the house another year to sell tax free. As of now I figure I can sell the house for at least 125k over what we paid a year ago and all I've done is put a new furnace in and a few other small details.
     
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  19. nickndfl

    nickndfl Midas Member Midas Member Site Supporter ++

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    I was told by a 3rd party that if you roll the profit on the sale into the next unit you can avoid cap gains taxes even if held less than 2 years. I emailed my accountant to see for sure.
     
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  20. Usury

    Usury Gold Chaser Platinum Bling

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    Typically that's a 1031 exchange and it is ONLY available for investment property.
     
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  21. Usury

    Usury Gold Chaser Platinum Bling

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    Seeing that all over the country lately. Not everywhere mind you, but in select spots all around the country. Definitely there's more consumer confidence with Trump Administration than I've seen or felt about the economy in probably over 10 years....if not 15. How long will it last? Who knows. As Stack posted above, builders are reacting and building more new homes. Eventually we'll hit supply/demand equalibrium and potentially oversupply/downward pricing trend if it's not all timed right.

    Pssst.....here's a hint: AIN'T NOTHING IN ECONOMICS EVER TIMED RIGHT. THERE IS NOT ANY WAY HUMANLY POSSIBLE TO "CONTROL" EVERYTHING, despite some beliefs to the contrary.
     
  22. Usury

    Usury Gold Chaser Platinum Bling

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    I was planning to look at possibly building next year. I'm considering throwing my house on the market for an inflated price to see if I can get it now.
     
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  23. Usury

    Usury Gold Chaser Platinum Bling

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    Not everything is a banking conspiracy. It's just simple consumer confidence and supply/demand.
     
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  24. Usury

    Usury Gold Chaser Platinum Bling

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    LOL...that's true, but even they can't ignore the numbers when they're in your face enough. (i.e., Election Night/Trump Victory).
     
  25. Usury

    Usury Gold Chaser Platinum Bling

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    I used to think that, but over my career, I've not seen that much of a correlation. Granted if we were to see double-digit rates like in the late 80's/early 90's, then I'm sure it'd have an impact. But the stuff that we see people seemingly loose their minds over (4.5% versus 3.5%......Oh the HUMANITY!!!) just doesn't make that much of a difference IMO.
     
  26. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Shortage of houses for sale leads to bidding wars in Bucks, Montgomery counties

    Realtor Shelly Franklin listed a Bensalem house on Saturday and sold it at full asking price the next day.

    Gloria Monks, a broker at Keller Williams in Doylestown Borough, said that does't surprise her. She is seeing homes sell within hours.

    "The sales market has been crazy," she said. "We've had one listing that sold within three hours."

    Ralph Bartone, of Falls, said he listed his Levittown home for sale Monday with Realtor Kathy Santy, of Coldwell Banker Hearthside Realtors in Newtown Township, and had seven people through the first day. On Tuesday, he received two offers and accepted one that was over his asking price. Bartone, who also owns a property at the Jersey Shore, said he will use Santy again to buy another rental property there.

    Mindi Beaver, of Newtown Township, said the home she and her husband own was under an agreement of sale within 48 hours, mid-week, and she had to turn down about 20 people who wanted to wait until the following weekend to see the property. Their Realtor, Martin Millner of Coldwell Banker Hearthside, said the house got many more offers than when it was listed five years ago.

    "We had multiple offers and we sold it over the list price," Millner said. "They did a lot of upgrades. It showed really well." They painted and freshened the kitchen and master bath, which are popular upgrades with buyers, he said.

    The housing market is very hot right now, said Franklin, a sales agent with Long & Foster in Yardley. The number of available houses and rental units for low- to middle-income buyers is low and prices are rising.

    The median price for single-family homes, excluding condos, in Bucks County rose 4 percent in the first quarter of this year — to $289,000 — compared with the same period last year, according to the Trend Multiple Listing Service. The median price for condos dropped 5 percent. In Montgomery County, the median price for both single homes and condos rose 2.3 percent in the first quarter — to $259,000 — compared with last year, according to the Montgomery County Association of Realtors, using Trend data.

    Robert Williams, broker for Coldwell Banker in Newtown Township and Buckingham, follows the Trend Multiple Listing Service data and said the inventory for homes in Bucks County last year was 18 percent less than the year before, making it the lowest level in more than a decade. And the first quarter appears to be continuing the trend: There are 14 percent fewer homes this year than in the first quarter last year, he said.

    Because so few homes are on the market — especially in the below-$500,000 range — they are getting more traffic from prospective homebuyers and sales are up. Falls had 28.6 percent more single-family homes sold in the first quarter of this year compared with the same period last year, Williams said.

    Housing data from the 2015 U.S. Census American Community Survey shows only 172 houses were estimated to be built in Bucks County since 2014, and 120 in Montgomery County, whereas thousands of homes were built in earlier decades.

    Pam Croke, CEO of the Bucks County Association of Realtors, agrees that a low stock of houses for sale is contributing to the rise in prices for both homes for sale and rent.

    At the end of the first quarter this year, 2,420 homes were for sale compared with 2,939 at the end of the first quarter last year, she said. Inventory is down almost 18 percent, she said, while pending sales for houses are up 7 percent over last year's first quarter, according to statistics on Bucks County from the Trend Multiple Listing Service.

    The Montgomery County Association of Realtors reported a 16.8 percent shortage of housing units this year compared with last, based on Trend MLS data.

    But while many of the homes are are selling quickly, the bidding wars that sent prices soaring during the early 2000s have been tempered by the reality of appraisal reports. Since the housing market collapsed in 2008, appraisals now must agree more stringently with the value of other similar homes in the neighborhood, Millner said. For this reason, the average price of single-family homes in the first quarter of this year in Bucks County are only up 1.9 percent over the same period last year, according to data compiled by Coldwell Banker from Trend reports.

    The shortage of houses for sale has affected the rental market as well. Young families who want to move out of rental units into homes of their own are renting longer because they can't find starter homes to buy, said Sydney Bennet, a spokeswoman for ApartmentList.com. Housing starts have risen since the recession of 2008 tanked the real estate industry, but the demand is still outpacing the supply, she said.


    Since these renters are staying put, that's causing a shortfall in rental units available, which is driving up rent rates. In Bucks County rents rose 6 percent over the past year, according to data by ApartmentList. In the Doylestown area, they rose even higher — by 7.9 percent. In neighboring Montgomery County, ApartmentList data shows that rents have risen 3.9 percent.

    Most renters are young adults leaving their parents' nest, said Franklin, a sales agent for Long & Foster Realtors in Yardley. Many want to live in Bucks but can't afford to buy a home because they haven't had their job for at least a year and don't have enough funds for a down payment and wouldn't qualify for a mortgage, Franklin said. They look to rent instead.

    She estimated that most condominium rental units in the Yardley-Lower Makefield area are going for at least $1,200 a month with an average price of $1,600 to $1,800. Houses for rent are fetching more than $2,000 per month.

    Some empty-nesters themselves are adding to the rental shortage. They're older baby boomers who want to ditch their house repairs and lawn care for a maintenance-free lifestyle, Franklin added.

    The ApartmentList report shows that the median price for a one-bedroom apartment in Bucks County is now $1,120. It's $1,500 for a two-bedroom unit. In Montgomery County, the price is $1,140 for a one bedroom and $1,450 for a two bedroom. If they're renting a house, Williams said families can expect to pay about between $1 and $1.25 per square foot of rental space.

    Franklin said that as the economy has improved, more people are relocating to suburban Philadelphia, and these "relos" are adding to the need for more houses to purchase or rent.

    Wherever homebuyers are looking, Williams said they should first get pre-approved for a mortgage and he also advised them to shop for homes $10,000 to $15,000 lower in price than the maximum they can afford to buy. That way, they have some wiggle room to up their offer if a higher offer comes in on the same property, and they will be considered a stronger buyer.

    "You're going to need to be very competitive," Williams said.

    Comparing 2016 and 2017 single-family housing markets
    Municipal Market 2016 1st Quarter Sold Average Price 2017 1st Q Sold Average Price Price Change Percentage 2016 1st Q Units Sold 2017 1st Q Units Sold 2016 Inventory at start of 2nd Q 2017 Inventory at start of 2nd Q
    Bedminster
    $388,000 $419,000 8.10% 18 15 66 88
    Bensalem $262,000 $249,000 -4.90% 105 92 199 227
    Bristol Township $165,000 $181,000 10.30% 145 155 284 344
    Buckingham $535,000 $535,000 0.00% 41 46 170 183
    Doylestown Borough $381,000 $385,000 -8.10% 16 13 39 50
    Doylestown Township $418,000 $398,000 4.50% 34 24 91 135
    Falls $221,000 $232,000 4.90% 49 63 109 118
    Lower Makefield $472,000 $478,000 1.40% 66 65 214 211
    Lower Southampton $265,000 $276,000 4.40% 30 40 63 92
    Middletown $289,000 $321,000 10.70% 78 79 135 161
    Morrisville $163,000 $190,000 16.50% 22 24 71 84
    New Hope $672,000 $570,000 -15.10% 3 3 17 23
    Newtown $411,000 $419,000 2.00% 41 42 76 101
    Northampton $395,000 $395,000 -0.20% 77 43 169 161
    Plumstead $382,000 $424,000 10.90% 41 35 112 132
    Solebury $742,000 $619,000 -16.50% 18 17 128 140
    Upper Makefield $861,000 $844,000 -1.90% 22 23 114 118
    Warrington $419,000 $370,000 -11.80% 36 36 106 93
    Warwick $381,000 $384,000 0.80% 31 40 74 95
    Wrightstown $502,000 $313,000 -37.70% 8 5 24 30
    Source: Coldwell Banker Hearthside Realtors Market Research from Trend MLS Data
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    Peg Quann: 215-269-5081; email: pquann@calkins.com; Twitter: @PegQuann

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