Philly Real Estate Market Spot Light

In January 2024, the Philadelphia housing market faced a notable decline in demand, as indicated by the Bright MLS | T3 Home Demand Index. The overall index for the Philadelphia Metro area decreased by 23.4 percent, consistent with limited buyer demand. This decline marked the fourth consecutive month of limited demand, with the index being 14 percent lower compared to the same period the previous year.

Segmented Demand

The demand for various types of homes in the Philadelphia Metro area exhibited variations. Luxury single-family homes experienced the most significant drop, plummeting by 41 percent, placing it firmly in the limited category. However, entry-level condos, while still in the limited category, showcased stronger buyer interest compared to other segments.

Demand by County

Buyer interest was in the limited category across all Philadelphia Metro area counties, with Kent and New Castle counties showing the strongest demand. Conversely, the New Jersey portion of the metro area experienced the weakest demand. In the Greater Philadelphia area, 90 percent of ZIP codes witnessed limited demand, reflecting an increase from 75 percent in November.

Market Trends

The overall trend in the demand index has been decreasing since April, with the most recent decline attributed to the expected seasonal slowdown at year-end and ongoing buyer affordability concerns, despite some relief from lower mortgage rates.

Entry-Level Single-Family Homes

The Bright MLS | T3 Home Demand Index for entry-level single-family homes decreased by 24 percent in December, reaching a limited level of buyer interest. The index was 25 percent lower compared to the previous year. However, the months supply of homes saw a slight decrease from 2.1 months in November to 1.9 months.

Mid-Market Single-Family Homes

The index for mid-market single-family homes remained in the limited category, experiencing a 27 percent decrease over the month. The months supply, at 1.6, was lower than any other type of home in the metro area and down from 1.8 months in November.

Luxury Single-Family Homes

Demand for luxury single-family homes remained in the limited category, falling by 41 percent in December. The index was 17 percent lower compared to the previous year, with the months supply at 2.3, down from 3.3 months in November.

Entry-Level Condos

Demand for entry-level condos was down by 20 percent in December, reflecting a limited pace of buyer interest. Despite the decline, the index at 60 was still higher than any other type of metro area home. There was a 2.9 months supply of homes available for sale, up marginally from the previous month.

Luxury Condos

Buyer interest in luxury condos witnessed a significant decline, with the index falling by 21 percent in December. The limited pace of demand was reflected in an index of 59, and there was a 9.9 months supply of homes available for sale, up from 6.5 months in December.

According to Zillow, the average home value in Philadelphia-Camden-Wilmington stands at $343,102, reflecting a significant 6.7% increase over the past year. Homes are swiftly moving into the pending status within an average of 16 days. Let's delve into the various housing metrics that contribute to shaping the forecast for this market.

For Sale Inventory

As of January 31, 2024, there are 11,146 properties listed for sale in the Philadelphia-Camden-Wilmington region. This inventory plays a crucial role in determining the options available for potential homebuyers.

New Listings

In the same timeframe, 3,516 new listings have entered the market, indicating a continuous flow of properties becoming available for prospective buyers.

Median Sale to List Ratio

Reflecting the market dynamics as of December 31, 2023, the median sale to list ratio stands at 1.000. This ratio is an important indicator of how closely homes are selling to their listed prices.

Median Sale Price

As of December 31, 2023, the median sale price for homes in the Philadelphia-Camden-Wilmington area is $318,467. This figure provides a baseline for understanding the price range in the market.

Median List Price

As of January 31, 2024, the median list price is $306,333. This metric helps potential buyers gauge the expected cost when considering a home purchase.

Percent of Sales Over and Under List Price

Examining the data from December 31, 2023, 41.8% of sales were over the list price, while 40.3% were under the list price. This insight provides a glimpse into the negotiation dynamics between sellers and buyers in the market.

Market Forecast

The market forecast suggests a positive trend with a projected 4.3% increase. This forecast is a valuable tool for both buyers and sellers in anticipating the direction of the real estate market in the coming year.

Are Home Prices Dropping in Philadelphia?

Contrary to a drop in home prices, the Philadelphia-Camden-Wilmington housing market is witnessing an upward trajectory. As of December 31, 2023, the median sale price sits at $318,467, indicating a healthy market where prices are not experiencing a decline. This stability provides assurance to both buyers and sellers regarding the overall value of properties in the region.

Based on the current data and the 4.3% positive market forecast for January 31, 2024, there are no indications of an imminent housing market crash in the Philadelphia-Camden-Wilmington area. The market appears resilient, with steady growth projected for the coming year. However, it's important to monitor economic factors and external influences that could impact the real estate landscape.