Philadelphia's housing inventory drops as home prices tick up
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Low housing inventory in the Philadelphia region is teeing up yet another competitive and overheated housing market at the start of the year.
State of play: Housing supply plummeted by 9.3% in the Philadelphia region in December 2021 compared to the same time during the previous year, according to a Zillow report.
- Inventory has dropped nearly 35% below pre-pandemic levels from December 2019.
Why it matters: It's still a seller's market, said Jeff Tucker, an economist with Zillow.
- "What that's going to mean [for homebuyers] is a harder time finding the right fit for their family — the right house, the right size, the right features in the right location," Tucker said.
- Worse yet: Even when homebuyers find a house, they're likely to face more competition, he added.
Flashback: The housing market began to cool starting in the fall, when price appreciation slowed and the number of homes sold above listing price dropped, Tucker said.
- In August, slightly more than 50% of all home sales in Philadelphia were above the listing price — an all-time high, Tucker said.
But this winter, the low supply of homes on the market is fueling price growth.
By the numbers: Home prices in the region soared by 14.7% in December 2021 compared to 2020, reaching an average of more than $313,500, per Zillow.
- Prices inched up by 0.7% from November to December 2021.
Meanwhile, a typical property listing on Zillow lasts 13 days before going pending, according to the online real estate marketplace.
Driving the trend: The pandemic has triggered a huge shift in demand for housing in which people are spending more resources on and in their homes, said Drexel University economist Kevin Gillen.
- "Your house is not just where you live anymore. … It's your residence, it's your office, it's your gym, it's your theater, it's your restaurant — it's all those things," he said.
What to watch: Mortgage interest rates are continuing to rise, but they remain historically low.
- The Federal Reserve is expected to hike interest rates in March.
What's ahead: The lack of homes hitting the market during the winter could result in a wave of new listings during the spring buying season, Tucker said.
- Yes, but: Gillen said he doesn't expect any major changes to the market until at least the second half of the year, should the volume of sales continue trending downward.