Philadelphia's housing inventory drops as home prices tick up
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.
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