Philadelphia Housing Market Forecast for 2024
2024 Philadelphia Housing Market Forecast
This in-house article is the 2024 housing market outlook for the Philadelphia area based off of our expertise and research (Look for our Baltimore Forecast in the next month's blog)! With all that said, we have been through a lot in 2023. Whether it was interest rates soaring to the highest they have been in over 20 years or the extremely limited housing supply, it seemed as though it was never going to get better. However, we started to see rates start to decrease as we approached 2024 and even though the housing market is not going back to pre-COVID conditions anytime soon, things are indeed starting to look slightly better.
Philadelphia's Home Buying/Selling Market
The 2023 housing market in Philadelphia was still being fueled by buying surge left by the pandemic. However, buying became more difficult due to consistently increasing interest rates coupled with the decreased supply of available housing. Despite these factors Philadelphia is still one of the "cheaper" big cities with it having a median home value of around $270,000. This is $130,000 less than the current national average. Moreover, to combat the increasing interest rates the prices have decreased roughly 4% since last year. Luckily, interest rates are slowly starting to go back down and while prices might stay the same or increase with these lower interest rates, that could lead to an increase in housing supply due to more people being ready to sell a home knowing someone will buy it relatively quickly. On the other hand it is proving to be more and more difficult to build a home in Philadelphia due to an increase in laws and regulations, as well as the price for labor and materials being at an all time high. From 2022 to 2023 builder sentiment in Philadelphia went from 76 out of 100 to 45 out of 100, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index. This in turn leads more people into rehabbing existing homes rather than building on unimproved land.
Philadelphia's Renters Market
The rental market has kept its strong presence in Philadelphia! According to a study, renters take up 47% of Philadelphia, Pennsylvania real estate, occupying a total of 289,341 units, while homeowners live in 323,784 properties. This ratio shows just how strong the Philadelphia renters market is and the importance of rental housing to the Philadelphia area. It has also been seen that 79% of renters find themselves in the same home as they were renting the year before with another 14% moving to another property in the same county. This is great for investors as it shows peoples willingness to stay which in turn helps the landlord avoid frequent turnovers. Another aspect of Philadelphia that helps its renters market is that it is home to around 53 colleges in and around the area. This not only sustains the need for rental properties but also offers investors guarantors for leases (such as cosigners) which help ensure that the rent will be paid and arrive on time.
Philadelphia's Housing Market Outlook for 2024
Whether you are in the buyers or renters world Philadelphia is an extremely seasonal marketplace. The highest peaks of the summer months, the DOM (days on market) averages around 35 – 45 days. Again, Philadelphia follows the classic wild summer selling months and slow winter months in terms of real estate values and sales. For real estate investors or buyers looking for good deals, shop during the coldest months of the year. The depths of real estate winters in Philadelphia bring tough times for sellers. Last winter (2022 into 2023), Philadelphia suffered from a staggeringly long DOM of 70 Days in the month of February. This was the longest DOM in 5 years. From our standpoint we see the same thing with renting during the winter, it is not only much slower but also there are some owners who end up offering incentives or decreased rents in order to get people into their units.
While Philadelphia is still considered one of the poorer "big cities" it still finds itself growing and improving. Philadelphia's non-farm employment rose by around 139,000 jobs in April 2023 on a year-over-year basis to 3.09 million. In April 2023, the unemployment rate in Philadelphia was 3.1%, according to the Bureau of Labor Statistics. That's a 1% decrease year over year. The national unemployment rate in April 2023 was 3.4%, down 0.2% year over year. These promising employment statistics should not only benefit the area overall but will also increase the demand for people to both buy and rent housing in Philadelphia.
Buyers & Sellers Forecast
Philadelphia has a very strong housing market and a surprisingly affordable price point for being considered one the the "bigger U.S. cities." This is reflected by the Philadelphia housing supply that should hopefully see an uptick in inventory with the decreasing interest rates. It is also important for buyers and sellers to stay patient during these times. Sellers should adjust their prices accordingly but not settle for an offer they aren't completely content with. Even though prices are lower than they were a year or two ago, the decrease in interest rates should help out as well as the extremely limited inventory. Buyers can also benefit from being patient as inventory should increase and those same houses that they were looking at before will become more affordable. Nevertheless, as a seller we advise that you don't sell unless you absolutely need to or you are going to be very satisfied by your return on investment. As buyers, we advise that you never buy something you cannot afford and to have a budget/plan in place before you even start your home search.
Renters' Forecast
Philadelphia has a very strong rental market which is perfect for investors and renters alike. From an investors standpoint, the average rents are high enough to profit off of your investment while also being in a position to be able to sell your property for a very decent return if needed. From a renters standpoint, the rent in Philadelphia is much more reasonable than in other "big cities" while also having more units/houses than those same comparative cities. Additionally, with jobs increasing and unemployment decreasing it should attract more people to the area that might not be ready for the commitment of buying a home. Moreover, the schools in and around the area help sustain the rental market, especially in the areas close by to those schools and appealing to college students.
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