Houwzer’s Senior Economic Advisor, Kevin Gillen, has released the Philadelphia housing market quarterly report for Q1 of 2018. Here’s the rundown on the city’s most recent inventory numbers, sales activity, and housing prices.
- Inventory: The number of homes on the market has risen slightly – by about 700 – but the numbers still remain drastically low compared to typical market conditions. Philadelphia’s housing inventory historically hovers around 6,000. At the end of March, there were only 4,000 listings in the city.
This isn’t just a Philly trend – it’s country-wide. Major cities across the country are seeing extremely low inventory that has yet to jump back up. But has the lack of inventory deterred buyers? Surprisingly not.
- Home sales: Sales activity has continued to surge. In fact, it’s the highest level of home sales in a Q1 since the height of the 2007 housing boom. However, there have been fewer million-dollar sales. (It’s worth noting that 2017 set a record high of 158 sales at the million+ mark.)
This is unusual, considering the number of home sales tends to stagnate in winter months. Especially when inventory is remarkably low. The slim pickings hasn’t scared off buyers too much – neither in Philly, nor in most other major U.S. cities. So what are Philadelphia home prices looking like?
- Housing prices: Pricing changes varied at the neighborhood level. For instance, prices in Lower Northeast Philly and Center City/Fairmount rose, while University City and North Philly dropped. Evaluated as a whole, the average home price fell 1.6% from the last quarter, but has appreciated 4.3% from Q1 of 2017. The median house price is the same as the last quarter at $150,000, but the average price fell to $184,390 from $188,668.
Gillen notes a decline in home prices is normal for cold months, but the average price growth deceleration is notable. For the past two years, Philly’s annual appreciation rate has outpaced the 10 largest U.S. cities. This recent deceleration to a 4.3% increase puts Philly back in line with its historic average appreciation.
After seeing a booming housing market in Philadelphia for the last six years, the natural assumption would be that the market is nearing its peak. Over the last three months, Zillow reduced its forecasted annual house price appreciation rate from 5% to 3.7%, and while that is a drop, it still falls into the “hot market” category. Is the deceleration in home price growth due to the typical winter slow-down or is the market actually starting to turn? Gillen says the long and harsh winter could delay that big-picture answer for a little while longer.
What does this mean for home buyers?
Competition is tight, homes are going fast, and the good ones are fielding multiple bidders. This doesn’t mean you should stop trying to find your dream home, but it does mean you should talk through your goals and expectations with your Realtor. Make sure everything is lined up and you’re prepared to make competitive offers in a timely manner. In this crazy market, you need a salaried Realtor who specializes in buying homes. You need a buyer agent who has the time and ability to focus solely on accomplishing your goals, helping you define what you really want and need in a home, getting you the best deal, and making this process as stress-free as possible.
What does this mean for home sellers?
If you own a desirable home or live in a attractive location with few homes on the market, you may be able to fetch top dollar for your home. Actually, you may be able to hit a high number even if your home isn’t extremely nice. However, even in a seller’s market, it is important to work with a salaried Realtor who specializes in selling homes. Someone who understands all of the nuances of varying submarkets, who knows how to price a home, who only works one side of the deal, and who is motivated by your goals rather than a commission. Meet with one of our listing agents and learn how you can save half the cost on the sale of your home, an average savings of more than $12,000 in Greater Philadelphia!
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Read the full report for more details:
