The signs are all around us…on houses, on websites and social media. The Philadelphia real estate market has shifted. This market surprised a lot of Agents and Sellers (and Appraisers). The economy, rates and seasonality are all taking a toll. Markets in the Philly Metro region are in one of three phases:
- The market is still showing signs of appreciation but, nothing like it was a year ago. It’s the last glowing embers of a hot market.
- The glow is gone. Things are cooling and are cooling fast. Homes are sitting longer. The showing lines are much shorter. Sales concessions and inspections are back in fashion. Sellers have lost their advantage and Buyers are in control.
- Yes, believe it or it or not, there are areas in our market that are in decline. Not falling-off-a-cliff decline but, more like a slow-roll-down-a-hill decline. Sellers priced too high are getting lower offers or are being ignored. There are fewer buyers. Inventory is picking up as some Sellers try to catch the last bit of a wave that’s already passed. List prices are being “corrected” to align with the current reality.
What can you do as an Agent during this market shift?
- Be aware of the shift and adjust your sellers’ expectations, accordingly
- Look at listings. They are the best indicators of the current market sentiment and show you how the competition is reacting.
- Learn to spot the declines, dig-down to understand your market.
- Prepare to see declines reported in appraisals going forward.
Learn to drill down on your market. There are actually some great analytical tools available on Bright. For instance, The Market Watch is a simple chart that you can set up to track the market as a whole or specific areas.
As of today, over the past 7 days, in the Philadelphia 5-county area, there were 1,046 Price Decreases, 1,082 New Listings, 166 Coming Soon, and 184 Back to Active. If you are a Listing Agent, Seller or have active listings, these numbers are telling you something.
They basically say that there are or will be some 1,432 new or renewed listings competing in the market. Trust me, these homes will be priced competitively for the current market. The 1,046 Price Decreases should also grab your attention. These are Sellers saying “we missed the mark with our original pricing and we are committed to pricing it more competitively, now.”
Proper pricing will be more important as we go forward. Buyers in the market will be funded (regardless of the rates), ready to buy and are not going to want to play games with unrealistic Sellers.
Another Bright report you should be looking at is the monthly Market Report. The most recent September 2022 Market Report has some very interesting data that would indicate that things are entering the “decline” phase. The report can be found at:
https://www.brightmls.com/article/market-insights-september-2022
Click on the Philadelphia Metro link and you will find a PDF of the report. There is a great summary of the findings on the first page labeled Philadelphia Market Key Findings:
My take away from these stats is that most of these numbers are heading in the wrong direction. Closed Sales are down, fewer sales. Median Price is up but, these numbers are for September. It will be interesting to see what the October numbers look like. I have a feeling they will be lower. Days on Market is growing, homes are taking longer to sell. New Pending Sales are down, buying is slowing. New Listings are down, fewer people are selling or have decided to wait-it-out. Active listings are up, inventory is growing slightly (probably Sellers still trying to catch the wave). Months of Supply is up, more inventory accumulating due to fewer Buyers.
The last stat, Showings, is in my opinion the most telling. This is a predictive number, measuring the activity of prospective Buyers. This number is way down. That suggest that there are fewer people actively looking at homes. Lack of interest, lack of money, fear of rates and the economy, regardless of the reason, prospective Buyers have pulled back.
Economics 101: Decreased demand and increased supply equals lower prices.
So, sharpen your pencils and study your market. Get help pricing if you need it. As always, be aware of competing listings and be sure to confirm the GLA of your property.
If you need have any questions or need advice with pricing, measuring or any other appraisal related issue, please feel free to reach out.
appraisals@coyleappraisals.com
215-836-5500
If you live in Philadelphia, you have probably already received your Proposed Notice of Valuation for 2019 from the Office of Property Assessment (OPA). Keep in mind that this is NOT A BILL. It’s a notice stating that the OPA believes that the value of your property has increased and that your assessment (and property taxes) will also be increased, as a result. If you feel that your new proposed assessment value is incorrect, you do have the right to file a First Level Appeal (FLA). The deadline for filing an FLA is May 25, 2018.
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