The next few months are likely going to be difficult for Philadelphia-area home buyers as they start the year with even fewer options than they had at the same time last year.
Last month’s housing supply in the Philadelphia metropolitan area was down 9% from December 2020 and down about 35% from pre-pandemic levels in December 2019, according to Zillow.
“Conditions are actually, amazingly, worse for buyers than they were one year ago,” said Zillow senior economist Jeff Tucker.
Demand for homes is outpacing supply at a faster rate than a year ago. Record low supply has pushed up home prices, frustrated buyers, and discouraged some homeowners from selling and competing for homes themselves.
The median home value in the Philadelphia metropolitan area is $313,529, up nearly 15% in December 2021 from December 2020, according to Zillow. Meanwhile, mortgage interest rates — while still at historic lows — are rising and increasing monthly housing costs. The market is especially tough for first-time home buyers.
“For someone who doesn’t have a foot on the escalator of property values, this is a hard time to try to get on,” Tucker said.
But “Philadelphia’s inventory shortage is not quite as acute as the nation as a whole,” Tucker said. Supply nationally last month was down nearly 41% from December 2019 levels.
“There were some glimmers of hope on the inventory front” in the summer and up through October, when supply was making up some ground, he said.
The housing market has boomed during the pandemic. What should we expect in 2022?
Then progress stalled and reversed. In the Philadelphia region, inventory fell 11% from November 2021 to December. It’s hard to pinpoint exactly why, Tucker said, but a few factors come into play.
The surge in coronavirus cases could be making homeowners hesitant to list homes. Many workers are in limbo because they aren’t yet sure of their employers’ long-term plans for in-person work.
Builders are starting construction on new homes at their fastest annual pace since 2006, according to the Census Bureau. But home completions have been lagging as builders continue to contend with shipping delays, material and labor shortages, and inspection backlogs.
In the Philadelphia metropolitan area, fewer new listings hit the market in December compared with the same time in 2020. New listings were down in every county in the region except for Delaware County, which saw a nearly 3% increase, according to the Mid-Atlantic multiple listing service Bright MLS. New listings decreased by more than 15% in Burlington, Gloucester, and Chester Counties.
As happened last winter, buyer demand has defied usual expectations and remains strong. “Buyers were more determined to keep persevering to buy a home, maybe because summer was so discouraging,” Tucker said.
In the Philadelphia region as well as the country as a whole, homes are typically staying on the market for 13 days before buyers snap them up.
The strong seller’s market is likely to extend into the busier spring season.
Doug Duncan, chief economist at Fannie Mae, said that “the combination of more new homes being completed and higher mortgage rates weighing on purchase demand will begin to bring more balance between supply and demand” in the coming months.
Every spring, the housing market sees more homes hit the market than in the winter, so more listings will come, even though there won’t be as many homes for sale as buyers could previously expect.
“The bright side for buyers is they will have more options,” Tucker said. “Everybody benefits from having more options to choose from to help them find the right fit for their family, so they can be happy in the house they end up in.”
This article is written by Michaelle Bond from The Philadelphia Inquirer and was legally licensed via the Tribune Content Agency through the Industry Dive Content Marketplace. Please direct all licensing questions to email@example.com.