The currently available data suggests that the Philadelphia housing market is a buying market, evident by the slow and limited levels of interest by buyers across different housing segments. The data points to issues in the market, including lower demand and higher mortgage rates. But, the term “crash” implies a severe decline and isn’t necessarily supported by current trends in the market. Continuous monitoring is vital to determine any potential market shifts.
How do you feel about the Philadelphia housing market currently performing?
The Bright MLS | T3 Home Demand Index for the Philadelphia Metro area experienced a 3.1 percent decrease in November, achieving a level of 63, which indicates a lack of buyer demand. These three consecutive months fall in the Limited category, which saw a notable 17.1 percent decline compared to the same time in the year before.
The entry-level single-family homes and condos witnessed a slight rise in interest; however, other housing types saw decreased enthusiasm in November. Luxury single-family homes, in particular, saw a dramatic decline of 15 percent in the Index, which indicates a low degree of buyer interest. Condo segments generally fell within the slow range, except for entry-level condos, which saw an increase of 4 percent in demand.
Supply Conditions:
The supply for November varied widely across different housing types, ranging from 1.8 months for mid-market single-family homes to 6.5 months for luxury condominiums. Although the collection of entry-level luxury and entry-level condos dipped in November, the other types saw supply conditions that were somewhat less tense.
Market Activity and Influencing Factors
Market Trends:
After a rise in October, The Index decreased in November, extending the downward trend evident since the middle of the year. The higher mortgage rate and the unfavorable supply conditions for buyers were essential factors affecting the market at the end of the year.
Regional Analysis:
Homes for sale throughout the Philadelphia Metro area exhibited mixed patterns, with limited buyers’ interest in specific regions like the New Jersey portion of the metro, Chester, and Philadelphia counties. The rest of the metro counties experienced slow demand, while Central Pennsylvania and the Salem-Cumberland region saw Slow or Limited buyer interest.
Segment-Specific Performance
Entry-Level Single-Family Homes:
The Index for single-family homes at entry level rose by 3 percent, reaching 66, indicating limited buyer interest. But, compared to the prior year in the same month, the Index was lower by 24 percent, highlighting the effect of lower affordability and increased mortgage rates. The supply of months rose between 1.8 to 2.1 weeks in November.
Mid-Market Single-Family Homes:
The Index for single-family homes in the mid-market fell by 2 percent in November, which indicates a lack of demand. The Index decreased by 17 percentage points compared to the previous year and had a slightly larger supply at 1.8 months compared to other segments.
Luxury Single-Family Homes:
The demand for luxury single-family houses fell by 15 percent during November, which resulted in an Index of 50 and a low level of buyer interest. The supply of homes was increased to 3.3 months, up from 2.9 months at the end of October.
Entry-Level Condos:
The entry-level condos saw the highest growth of 4 percent in demand. This was evident by the Index of 74, indicating an increase in demand but at a slower pace. The supply decreased slightly by a little to 2.8 months in November.
Luxury Condos:
The demand for luxury condominiums fell to 9 percent in November, resulting in an Index of 74 and a slow interest rate from buyers. The monthly supply fell to 6.5 months from eight months in October.
Is Now a Good Time to Buy a House in Philadelphia?
With the limited and slow rates of interest from buyers, in conjunction with issues like increased rates of mortgages, it is an ideal time for prospective buyers to investigate possibilities for housing in the Philadelphia market. However, individual factors and market conditions must be considered.
Philadelphia Housing Market Forecast for 2024
What do you think of some Philadelphia real estate market forecasts? Zillow has provided valuable insights into the Philadelphia-Camden-Wilmington housing market, offering a glimpse into key metrics and trends. Let’s dig into the information to comprehend the present scenario and future outlook on the residential real estate market within the area.
Overview of the Market
The average home value in the Philadelphia-Camden-Wilmington area is $341,744, reflecting a 6.4% increase over the past year. Notably, homes are being sold quickly and have an average wait time for pending status in fourteen days (Data until December 31st, 2023).).
Market Forecast
The 1-year market forecast, on December 31st, 2023, shows a positive outlook with a projected increase of 3.1 percent.
Inventory and Listings
- For sale inventory (December 31st, 2023): 12,200
- Updated listings (December 31st, 2023): 4,082
Pricing Dynamics
- Median sale price (November 30th, 2023): $320,667
- Median list price (December 31st, 2023): $314,667
- Median sale-to-list ratio (November 30th, 2023): 1.000
Sales Performance
- Percentage of sales that exceed the price of the list (November 30th, 2023): 45.3 percent
- Percentage of deals that are below the list price (November 30th, 2023): 37.7 percent
Are Home Prices Dropping in Philadelphia?
Contrary to the trend of a decline in the market, the median home price has risen and was $320,667 at the end of November 2023. This is a sign of a stable and growing demand, with the potential for a 6.4 percent increase in home value over the past year.
The projected expansion of 3.1 percent in the coming year is a sign of a favorable future. While various aspects influence the real estate market, the data does not suggest an imminent crash. Instead, it’s an expanding and stable market.
Source: Zillow
Philadelphia Real Estate Investment Overview
Are you considering Philadelphia real estate investments? Many real estate investors have wondered if purchasing an investment house within Philadelphia is a wise investment. Digging more deeply into the local market to know what the future offers real estate buyers and investors is essential. Let’s look at Philadelphia before we look at the possibilities for investors and buyers of homes.
Philadelphia is among the largest and oldest cities in the United States. Philadelphia is often portrayed as a failed historic city that has merged with the Rust Belt. But, the city is gaining momentum in the coming years. Philadelphia real estate market forecasts indicate a promising chance for investors to invest in 2023. The city is the biggest in Pennsylvania and the second-largest on the East Coast. It is the sixth most significant city in the United States (Phoenix has beaten out Philly to be within the Top Five).
And, unlike other major cities, the population of this one is slowly growing. Its population has grown yearly for at least seven years, and it is the second-fastest-growing county in the region. What is the size of The Philadelphia Housing Market? More than one million residents reside in Philadelphia. Philadelphia is in the hub of the Delaware Valley. It is the sixth-largest metropolitan region of the United States. The metro area is home to about six million residents.
If you look at Philadelphia along with its suburbs, it is clear that the Philadelphia housing market is still home to four million residents. Let’s examine the current situation of the Philadelphia property market and the forces that drive the market both in the short and the long term. This article is not the complete source needed to make a final investment decision for Philadelphia.
Density Provides Opportunity
The downside to a constructed market is that you can’t expand because everything else is developed. That means that you cannot build and redevelop or subdivide. The shortage of housing versus demand keeps prices and property values high. Over half of jobs are located in Center City and University Center, meaning almost everyone would like to reside in or near these zones. If you find a property that you can convert into multi-family dwellings or luxurious housing that you can afford, you’ll get a considerable profit from the investment.
Philadelphia Real Estate Is Very Affordable
The real estate market in Philadelphia has been praised as a potential opportunity for investment because of its affordability. Compared to other cities, Philadelphia provides a variety of homes with reasonable costs, making it an attractive investment opportunity for real estate buyers.
The variety of the neighborhoods in this city enhances the affordability aspect. Each has distinct appeal and potential. This makes it an excellent choice for experienced investors looking to diversify their portfolios and newcomers looking to enter the real estate market. Like all investments, conducting thorough research and taking an intelligent approach is essential; however, Philadelphia’s affordable properties offer an exciting environment for those looking into investing in real estate as an investment option.
Strong Real Estate Appreciation
According to the Zillow forecast for the Philadelphia property market, there exist signs of possible possibilities for investors in real estate, especially about the rapid appreciation of real estate. The anticipated increase in Philadelphia MSA housing market index values over the specific timeframes suggests a positive outlook for regional property value. This could result in an environment that favors genuine property appreciation and is essential for investors looking for longer-term value growth.
While the forecast predicts an increase in value, investors must approach their investment decisions overall. Other factors beyond market appreciation, like rental demand location, property condition, the area, and the local economic climate, must also be considered. A thorough research of the market and due diligence are vital before making any investment decision.
The Large Philadelphia Rental Market
About 46% of the homes within the Philadelphia market are rented out, which is more than the national average. This is caused by the city’s poor population and partly due to the greater-than-average number of singles living independently. Center City has a large and car-free population. They take advantage of public transport and can’t relocate to the suburbs because they don’t own a car. Be sure to research the legalities before purchasing rentals within Center City’s Philadelphia property market, as you’ll be liable to taxes and charges that aren’t required under Pennsylvania State law.
Nearly every major city has universities that house many students and renters. Philadelphia, as a city that is both big and old city, has numerous universities. There are twenty-four-year universities in Philadelphia, many of which are located in Center City. There are a dozen other two-year and tech colleges situated in Philadelphia. To add to the diversity of the Philadelphia rental market for students are seminaries and medical schools within the city.
The typical rental income for properties in the Philadelphia housing market is approximately $1300 a month. However, this ranges from two-bedroom single-family homes to five bedrooms with three bathrooms, which are high-end properties. Considering the median value for a parcel of $200,000, the standard cash-on-cash yield for the listed properties is 2.6 percent. Find a bargain or improve a home to meet the needs of an elite market, and you’ll see more lucrative returns.
Another reason to anticipate a higher ROI is that the rents in Philadelphia are increasing. The median rental for homes in the Philadelphia market is thought to be $1400 per month, but that’s less than what you’d find in surrounding suburbs. There’s no room for it to increase.
In January 2024, the median rental for all bedrooms and kinds of properties in Philadelphia, PA, will be $1,699. This is less than the median national. Prices for rent in all types of bedrooms and types of property for Philadelphia, PA, have decreased by 1% during the past month and grown by 6% over the past year.
The Strong Short-Term Rental Market
While many cities have been fighting Airbnb and other rental websites for short-term rentals, Philadelphia realizes this is an effective way to provide visitor services and allow local homeowners to earn money. This is why Philadelphia is an excellent choice for a city-friendly short-term rental website like Airbnb. One of the conditions to fulfill is that you pay the 8.5 percent tax on all profits. Also, making the home not appear as a home is unnecessary. These rules are only applicable to principal residences. If you are a non-resident landlord, you can also lease out houses through Airbnb. However, you need to submit a request for a visitor accommodation exception. Multi-family dwellings can be rented out through Airbnb in Philadelphia when you complete the proper documents.
It Is Relatively Landlord-Friendly
Many real estate investors would like to know if a particular area is tenant-friendly or landlord-friendly. Pennsylvania is typically a landlord-friendly state. Philadelphia, however, is more stricter. At the beginning of 2018, The City Council discussed laws that could limit evictions to justified situations. Just cause can include the non-payment of rent, non-sensical behavior, and a breach of lease. It is impossible to expel anyone from the property to make improvements.
The tenant must be allowed to take a lease renewal or a higher rent at the time of renewal instead of being expelled. The other laws are far more favorable to landowners. There is no grace period law. There are no limits to late fees. There aren’t any pet laws. Although Pennsylvania’s state Pennsylvania does not require a permit to rent out a property, anyone who purchases property within Philadelphia’s housing market Philadelphia housing market has to obtain a commercial activity license and a license for housing rental.