Philadelphia Real Estate Market Trends to Watch in 2024

National real estate trends provide valuable insights into the broader market. However it's crucial to recognize that the impact of these trends on home buyers varies significantly depending on the local context. In this article, we dive deeper into the national real estate landscape, focusing on how these trends are shaping the experiences of home buyers in Philadelphia. By examining the specific implications for those seeking homes in the City of Brotherly Love, we aim to provide a tailored perspective on the challenges and opportunities that await prospective buyers in this vibrant city.

Philadelphia's Current Real Estate Landscape

The latest data from the National Association of REALTORS® (NAR) indicates that the Philadelphia housing market is showing signs of recovery. Median existing-home sales prices in June reached their second-highest level in two decades, reflecting a robust market. However, it's not all smooth sailing as more buyers are encountering multiple offer situations, indicating strong demand.

Positive Market Indicators

Lawrence Yun, NAR's chief economist, suggests that while the recovery is ongoing, the housing recession is behind us. Multiple offers on properties indicate that housing demand outpaces supply. Fortunately, homebuilders are responding by increasing production and hiring workers to meet this demand.

Inventory Shortages Persist

One of the significant challenges for home buyers in Philadelphia is the persistently low housing inventory, which is down 13.6% compared to the previous year. This shortage has driven 76% of existing homes to sell in less than a month. Limited choices and rising home prices have made the market competitive.

Mortgage Rate Relief on the Horizon

Home buyers in Philadelphia have been facing higher mortgage rates. However, there's potential relief in sight. Yun suggests that the recent increases in mortgage rates may have peaked, especially with consumer price inflation stabilizing. If rates decline, this could lead to increased buyer activity in the coming months.

NAR's Market Forecast

According to NAR's latest forecast, here's what to expect in the Philadelphia real estate market:

• Existing-home sales: NAR predicts a 12.9% decline in existing-home sales in 2023 compared to 2022, followed by a 15.5% increase in 2024.
• Prices: National median existing-home prices are expected to remain relatively steady in 2023, with just a 0.4% decrease compared to 2022. They are projected to rebound by 2.6% in 2024. The West may see more significant price reductions, while more affordable regions like the Midwest are expected to witness moderate increases.
• New-home sales: Sales of newly constructed homes are anticipated to rise by 12.3% in 2023 and by another 13.9% in 2024. The national median new-home price is forecasted to decrease by 1.9% in 2023 before rebounding by 4.2% in 2024.
• Housing construction: While economists have been calling for new-home construction to address supply deficits, NAR forecasts a 5.2% decline in housing starts in 2023 compared to 2022. However, a rebound is expected in 2024, with a 5.4% increase.

The Importance of Expanding Supply

Lawrence Yun emphasizes the critical need to expand housing supply to increase accessibility to home buying for Americans. Home prices are closely tied to inventory levels, and increased homebuilding can help stabilize price growth while limited construction may result in home price appreciation outpacing income growth.

Regional Variations

It's important to note that the housing market's performance can vary by region. While pending home sales were down 15.6% in June compared to the previous year, there were regional variations. Contract signings increased month-over-month in the Northeast and Midwest but declined in the South and West. Despite regional differences, all major U.S. regions saw year-over-year decreases in transactions in June.

Forecast Recovery

The Philadelphia real estate market in 2024 is poised for a recovery, but it remains competitive due to limited inventory. While challenges persist, such as rising prices and mortgage rates, there's optimism for buyers as rates may stabilize. Prospective homebuyers need to thrive in this market. They must stay informed about evolving trends, and collaborate closely with real estate professionals. This will enable them to act swiftly when they find the right property.