After 2+ years of a real estate market frenzy, things are slowing down. For the past couple of years, we’ve seen an extreme seller’s market. We’re starting to see that trend shift. More homes are hitting the market and the buyer competition is slowing. Here are 3 key things to know about this shifting market in Philly.
1. Home Inventory is Increasing = Buyers Have More Options
Home inventory in Philadelphia has steadily been increasing since the beginning of 2022. For years, there has been record low inventory. Simply put there just weren’t enough houses on the market to meet the demand. However, that is beginning to change.
In January 2022, home inventory was at 3,788. Fast forward to July 2022, home inventory is at 5,419. With more homes on the market, this means buyers have more options to choose from and it spreads out the competition.
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2. Buyer Demand Slowing = Less Bidding Wars
We are also seeing less buyer demand than we’ve seen over the past few years. So with more inventory and less demand, this evens out the market. We’ve seen bidding war frenzies for awhile now, but with less demand and more inventory, the number of multiple offer situations with bidding wars should go down.
A good indicator of buyer activity in an area is the showing activity. We ran the numbers through ShowingTime and found that in Philadelphia showing activity has significantly decreased in the past two months compared to previous months this year. See below for a chart of the showing activity in Philadelphia in the price range of $100-599K.
According to the National Association of Realtors, the number of offers on a home has been decreasing for the past several months as well. In June 2022, there was an average of 3.4 offers on a home. That’s compared to an average of 4.2 offers in May 2022 and 5.5 offers in April 2022.
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3. Fewer Buyers are Offering Over Asking Price, But it’s Still a Competitive Market
So now we know that home inventory is increasing, which means you have more options during your home search. Plus, buyer competition slowing down leading to fewer bidding wars also means that fewer homes will sell above asking price.
According to NAR, 51% of homes sold over asking price in June 2022. That’s compared to 55% in May 2022 and 61% in April 2022. That means the number of homes that sold over asking price has dropped 10% in the past two months.
That tells us it’s still a competitive market. Competition is slowing, but it is by no means halting. We are seeing the market even out and return to some “normalcy.”
According to Bright MLS, housing market activity in Philadelphia is expected to continue to slow through the second half of 2022 and into early 2023. Experts say market conditions will be more in line with pre-COVID trends.
If you’re considering buying a home in Philadelphia, now is a great time to get into the market! Contact us to start your home search today.