As the summer continues to fly by, the current real estate market creates an opportunity for buyers and sellers. Understand the trends in current home prices, how to price strategically as a seller, where to look for great deals as a buyer, and how the current interest rates affect the market. If you're looking for guidance as you buy or sell in Philadelphia, get in touch with the MUVE | PHL team!
The Philadelphia Real Estate Market by the Numbers
Consumers who are. If you look at the market compared to the last few years, things look like they are slowing down, but we are seeing a bit of a pickup as we head into the spring and summer that points to opportunity on both sides of the market.
Median Sale Price: $270,000 (-5.9% since last year)
Median Days on the Market: 40 days (+8 since last year, but down since last quarter)
Current interest rates are still increasing slowly since last quarter.
Conventional 30-Year: 7.25% (national average)
Conventional 15-Year: 6.54% (national average)
For Sellers: What to know if you’re selling a home in Philly
As a seller, the current real estate market requires an aggressive pricing strategy and flexibility
Softer market conditions coupled with the natural seasonal slowdown of Summer command a reevaluation of pricing strategy. An aggressive approach to pricing and positioning lower the days on market and achieve a faster sale. Regular check-ins and evaluations of the market activity, interest, and offers allow for necessary adjustments to be made.
An approach to combatting poor interest rates
A major objection in todays market is that buyers are feeling the squeeze of today's interest rates. Sellers have an opportunity to leverage their equity and offer credit to prospective buyers in order to buy down the interest rate of an acceptable offer. This requires coordination with a lender but an agreed upon dollar amount can substantially lower the interest rate for the buyer, and bring a higher overall offer.
This strategy is complementary to a home that is aggressively priced compared to similar homes on the market, and creatively entices offers.
For Buyers: What to know if you’re looking to buy a home in Philly
For buyers, seasonality can create opportunity
Lower activity and lesser buyer foot traffic during the summertime in the city, means less competition for homes that come to market during this time. This creates a buyer friendly market which can offer opportunity for lower accepted offers. Sellers are apt to taking a "bird in hand" offer when there are fewer showings and less offers.
There is lingering inventory from the spring market that has now become stale and sellers are now more motivated as the days on market increase, and are vulnerable to under ask offers or offering buyer concessions. Additionally, as much of the city spends the summer traveling or summering elsewhere, well-priced, beautiful listings have less eyes and therefore less competition.
Looking to buy a home in Philadelphia? Check out our top 10 questions from first-time homebuyers, answered.
Where is the housing market headed in the fall of 2023?
This fall, we can expect a seasonal uptick but not a major influx of activity
The lack of inventory will continue to be an issue and sustain lower market activity. Elevated interest rates will continue to have a freeze effect on buyers who do not need to buy immediately. Until inventory levels rise substantially and interest rates level, we cannot expect to see a large increase in movement in the market. The market needs product to transact, and until that product is created, the market will continue to stall.
There will be the expected uptick in activity that we see every year from summer to fall, however as stated above the degree of increase will be lesser.
Choosing the right neighborhood to buy in based on the current market in Philadelphia
Despite the slow down in the market, many popular Philadelphia neighborhoods still experiencing fast growth and investment potential. If buyers can look beyond current interest rates and make a move now to the right neighborhood, it could absolutely pay off in the long term. For the greatest growth potential, consider properties in neighborhoods like Northern Liberties, Fishtown, and Graduate Hospital. If you can buy a home slightly below market value now, in a few years when the market picks back up you can flip it for a big payoff.
Because there is more flexibility in pricing right now, it can also be a great time to buy in one of Philadelphia's most coveted neighborhoods and get a price below typical market value. Explore neighborhoods like Rittenhouse Square, Old City, and Washington Square West. Despite movements in the market, these higher end neighborhoods will always be in demand and are relatively easy to sell in any market.
How do the current interest rates affect home prices?
Sustained higher interest rates have driven prices down.
The current above-average interest rates have been a reality for both buyers and sellers for more than half the fiscal year, establishing itself as the new normal. The natural ebbs and flows of seasonal market activity are all still evident, just on smaller scale. There is a sustained pattern of lower average home price, year over year, which we can expect to continue as rates hover at an elevated rate.
Where is there current opportunity in the real estate market?
The opportunity lies within a strategic approach to either purchasing or selling a home.
In this unique market, it is key to play to your advantages as either a buyer or seller.
For buyers, this looks like utilizing creative financing options, pursuing stale listings, or seeking seller concessions to lower overall cost. This can also mean reevaluating must haves and expanding neighborhoods or interest to broaden the pool of prospective homes.
For sellers, this means approaching pricing realistically, and capitalizing on creative offerings for prospective buyers. The best tactic now is to attract interest through appropriate pricing, and secure offers through a willingness to work together on how to make the offer work for both parties.
If you're a first time home buyer or aren't sure how to best navigate the current market, consider working with a real estate agent to get your questions answered.
Do you need expert guidance as you enter the real estate market in 2023?
At MUVE | PHL, we believe education is the most valuable asset in real estate.
We provide our clients with information to help them make the best decisions, ask the right questions, and ultimately find the right homes. Let's have a conversation about what you're looking for and how we can help.
