Philadelphia's housing market cooled slightly in this fiscal year's second quarter, but it remains ultra-competitive thanks to low supply fueling aggressive price increases.
Why it matters: Housing price growth continues to exceed household income growth, which Drexel University economist Kevin Gillen writes could indicate that "more homes are becoming less affordable (or even unaffordable) to an increasing number of Philadelphians."
State of play: Just over 3,000 homes are currently listed in Philadelphia, Gillen noted in a Q2 housing report published last month. That's down by more than 50% compared to 7,400, the city's historic monthly average going back nearly 20 years.
- Meanwhile, the average seasonally adjusted price of a Philly home increased by 2.8% from April to June. However, Q1 saw a higher growth rate of 5%.
- West and Southwest Philadelphia have seen the largest jump in home prices year over year, and University City was the only neighborhood to see a dip.
- Zillow projects the city's average housing prices to increase 6.5% over the next year — a downgrade from its previous forecast of 8.3%.
Between the lines: While home sales were well above those during the same time last year, they were below Q2 sales in 2019, 2018 and 2017.
- The trend downward in sales could suggest "sellers are beginning to hesitate at paying such high prices when low supply restricts their choice to their less-than-ideal home," Gillen writes.
What they're saying: Shaquiyyah Jenkins, founder and real estate broker for Domain Real Estate Group, told Axios that competition and housing prices were "insane" during the first two quarters of the year. But she said the market has cooled as of September, which typically happens when students return to school.
- "If a buyer was interested, now would be the best time for them to buy something because it’s not as competitive as it was in Q2," Jenkins said.
Gillen told Axios on Friday that recent home sales are "still running hot," meaning sales are above average and prices are growing. But turnover and frenetic bidding have slowed.
- He said it's too early to call that a trend.
What's ahead: Expect above-average price growth and below-average supply to continue in the short term, Gillen said in the report.
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