The Philadelphia housing market is getting hot again. Is this your time to buy?
The United States has been a tough market for people looking to buy a home. The median home price has increased by nearly $100,000 over the last two years.
This has already affected the hot housing market in Philadelphia. The question is, are the days of bidding wars and above-asking home sales coming to an end?
Read on to discover the current state of the Philadelphia real estate market. Keep going to find out what to do if you are ready to buy!
Every quarter, the National Association of Realtors releases reports on the housing market of a local area. At the time of writing, the latest information available for the Philadelphia area was the first quarter of 2022.
These are some of the things that stuck out from that report.
In the Philadelphia area, the median home price during the first quarter of 2022 was $297,900. Compared to the national price, that can be more than $130,000 less than the national median home price.
So, has the median home price increased or decreased compared to last year? The answer is it has increased and it has done so by a decent percentage. In one year, the average Philadelphia home appreciated by 8.3%.
Over the last three years, the average appreciation on a Philadelphia home has been 32.5%. That is about 12% less appreciation than the national housing market.
If you go back about nine years, you will see that Philadelphia homes are worth over $100,000 more than they were worth in 2013. The United States has nearly doubled this gain over the last nine years.
When it comes to affordability, Philadelphia still does very well in this category compared to the national average. Last year and during the first quarter of 2022, the city has a 1.6 ratio when comes to median home price to income. In comparison, the national average ratio is more than double, at 3.3 during the first quarter of 2022.
How about mortgage payments compared to the income that residents are bringing in? Admittedly, it has increased in the first quarter of 2022 compared to 2021 for Philadelphia homes.
Last year, the percentage was 8.1%. In the first 2022 quarter, it was 8.8%.
While the increase is notable, it is not nearly as bad as the national average percentages. Last year, it was more than double at 16.9%. In this quarter, it was even higher at 18.5%.
What this should tell you is that if you want to buy a house in Philadelphia, you are not going to have to put as much of your income towards mortgage payments. Instead, you can save more of your income and you likely have a good enough job in the area to afford the mortgage payments.
Another thing that can affect the local market is how many new houses are being built. Well, in 2022, Philadelphia is expected to have more houses available for buyers.
That is because new housing construction increased by 26.7% in 2022 compared to the average amount of new houses built per year in Philadelphia. There are over 9,000 new building permits this year whereas the typical average is just over 7,000.
What about single-family homes? The construction of those has increased as well compared to a year ago. In Philadelphia, it is up by 7.6%, whereas in the United States, it is up by 7.8%.
One thing that can signal a strong or weak housing market is if the people living there can afford to live there. This is usually why foreclosures happen.
However, in Philadelphia, the last two years have seen the lowest foreclosure rate in the last decade. It has not gone above 1% during that time.
What is worth noting here is that Philadelphia is still slightly higher than the national average. It took until 2020 for Philadelphia to fall under 1%, whereas the United States accomplished this by 2019.
If you did not buy a house in 2021, you missed arguably the best time to get a good mortgage rate. That was because, for that entire year, mortgage rates were never above 3.5% in Philadelphia.
Good luck finding that in 2022. In the first quarter, the mortgage rate was around 4% and has increased since then.
During the main two years of the pandemic, mortgage rates were lower than they have been in a long time. It is not expected to go back to that.
So, taking all of the information above, where do realtors think the future of the Philadelphia housing market is heading?
Well, the answer is that they are not optimistic. Philadelphia realtors are not expecting much growth in the real estate market over the next year.
How does this compare to the national expectations? Nationally, the United States is a little more optimistic. In the first quarter of 2022, it is expected to grow by 3.6%.
These are some notable assessments from the first quarter report for the 2022 Philadelphia housing market.
The main things to take away here are that more houses are being built than in an average year and the mortgage rate has drastically increased compared to 2021. What this means is that local realtors are expecting the market to cool down over the next year.
If you are a buyer, that could mean that it could be better to buy a home for you soon.
Are you looking to buy a home? Message us with your plans today.