Houwzer’s Senior Economic Advisor, Dr. Kevin Gillen, has released his Q3 housing market report for the Greater Philadelphia region. Here’s what the third quarter looked like in terms of inventory, sales activity, and housing prices.
For the last three quarters, the region has been locked in a “seller’s market” holding pattern. This quarter continued to follow suit. Inventory in the suburbs is still drying up, dropping from 3.4 months’ supply of homes in the last quarter to its current 1.9 months’ supply. Meanwhile, the city saw a significant inventory boost jumping from 2.1 months’ supply up to 3.6 months’ supply this quarter. Both remain well below the 5 month supply that is indicative of a balanced market.
- Inventory: At the end of October, there were 22,534 houses listed for sale in the region. That’s nearly a third less than the region’s historic average of 31,609 listings.
That low inventory has yet to slow down buyers, as even luxury homes are being bought up quickly. The region set a new record this quarter for million-dollar home sales at 318 homes – 35 in the city and 283 in the suburbs. The previous record was 280 million-dollar sales in 2016 Q3.
- Home sales: There were 25,583 homes sold this quarter, making it the highest volume of Q3 sales in 13 years. Pretty impressive considering that Q2 just had the highest sales volume of any quarter since the recession. In combination with the region’s limited inventory, this high sales volume is causing the region’s homes to sell off much faster than in normal conditions – an average of 81 days in the suburbs and 42 days in the city.
Home prices are still rising, however the pace has dropped dramatically. In light of the fact that home prices trend upwards in the summer months, the price gains are actually pretty modest.
- Housing prices: In Q3, the median home price increased from $245,000 to $250,000 in the suburbs (a 2% increase) and from $153,250 to $160,000 in the city (a 4.4% increase). Adjusted for seasonality and quality, the suburban price index rose by 1% in Q3 – far less than the 5.1% increase it had in Q2. The city’s price index increased by 2.1% in Q3 – accelerating from the last quarter’s meager 0.9% increase.
What does this mean for home buyers?
Buyers should keep an eye on the market as most industry analysts and economists believe that the nation’s housing cycle is either at or nearing its peak. Philadelphia’s housing market forecast remains positive, but since Philly’s housing market has historically lagged behind most major metros, keeping tabs on the country’s other large cities could give more insight into what’s ahead for this region.
No matter where you’re looking to buy, you’ll need to be prepared – both financially and mentally. This persistently low inventory is forcing buyers to compete for and move quickly on the most desirable homes. Meet with a Realtor to develop a game plan – figure out what your non-negotiables are and make sure everything is lined up so you’re able to jump on the right home. Don’t let yourself be pressured into buying a home that isn’t right for you or that is at the top of your price range. The best way to make your home buying experience as stress-free as possible is by working with a salaried Realtor that specializes in buying homes – someone who’ll be focused on your goals rather than a commission.
What does this mean for home sellers?
It remains to be seen if buyer competition in a low inventory environment will continue to drive up prices (albeit at a slower rate than the past few years) or if the increasing interest rate environment will exert enough downward pressure on buyer demand that we start to shift more toward a buyers' market. Keep an eye on what’s happening in other major U.S. metros as Philadelphia’s housing market tends to ride their coattails.
This “seller’s market” we’re in isn’t new, but it might be nearing its end. If you’ve been waiting for prices to peak before selling, that point might be on the horizon. This quarter’s report shows flattening home prices and the shift to a buyer’s market could happen any day now. However, this doesn’t mean that it’s the perfect selling time for everyone.
If you’re considering selling your home in the near future, we recommend talking to a salaried Realtor who specializes in selling homes to build the best game plan for you. Our listing specialists understand all of the nuances in submarkets, know how to price a home, and are motivated by your goals rather than a commission. Meet with one of our listing specialists and learn how you can save an average of $15,000 on the sale of your home.
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Read the full report for more details:
