As we enter a new year, the COVID-19 pandemic is, unfortunately, still stuck with us. So, what does that mean for the housing market? Investors hope that the New Year will help create a more stable market. However, the past few years have been abnormal because of the pandemic, and we’ve seen many changes in inventory and home prices across the country. So, what is the state of the Philadelphia housing market? Let’s take a look.
The Philadelphia Housing Market
Philadelphia is a highly favorable place to live, and the housing market shows it. However, the demand for homes in Philly is so abundant that there are not enough houses to keep up with it. So, the large gap between supply and demand has rapidly increased the price of homes throughout the area.
Although the pandemic took its toll on the entire world, the housing market has persevered in some areas throughout 2021. That said, experts predict that the Philadelphia housing market may start to slow a bit during 2022.
Before we go over some more predictions for the upcoming year, let’s decipher what types of homes are most desirable in Philadelphia and surrounding areas.
Common Types of Housing in Philadelphia
Over the past couple of years, the Philadelphia housing market has been extremely hot. However, with more and more people looking to live in the area, homes become limited. Some of the most popular housing types in the area include three and four-bedroom row houses and attached homes.
Other common places to live include substantial apartment complexes, and large houses converted into apartments. Similarly, duplexes and single-family homes are among some of Philadelphia’s most ordinary places to live. Now, let’s discuss the market state for 2022 and go over some modern market trends.
State of the Philadelphia Housing Market for 2022
As we continue through the new year, investors are starting to look at the best time to make another housing purchase. So, if you are looking into investing in real estate near Philly, keep reading as we discuss what this upcoming year may look like.
Investors have found it more challenging to purchase a home in Philadelphia throughout the past year. However, ever since the interest rates dropped to an extreme low, the popularity of buying a home in Philly has increased. Thus, leading to a highly competitive housing market and a surge in home prices.
However, some investors have decided to wait until 2022 to purchase in hopes that the market will calm down a bit. Luckily, the signs point to more houses and lower home prices throughout the year.
Now, to give investors a good look at what to expect in 2022, let’s go over some predicted market trends for the Philly area.
Philadelphia Market Trends
As stated above, the past year has been frustrating for individuals looking to purchase real estate in Philadelphia. However, things are looking up for investors now that things have slowed down and the market is starting to level out.
Now, let’s dive into some of the Philadelphia market trends to watch for this year.
- Higher Mortgage Rates
- Slightly Lower Home Prices
- Increased Development
Higher Mortgage Rates
Over the past two years, we’ve experienced extremely low mortgage rates. In an attempt to spark the economy during the pandemic, the Federal Reserve lowered the cost of borrowing. Similarly, they bought mortgage-backed securities (MBS) to support the housing market further.
As a result, people in the United States took advantage of the low prices and purchased homes in record numbers. However, once the economy regained stability, it led to extreme bidding war conditions throughout most of 2021.
Now, as inflation rates rise and the Federal Reserve holds back on MBS purchases, mortgage rates are also destined to rise.
Slightly Lower Home Prices
As mortgage rates rise, some individuals and families will stray away from purchasing homes this year. However, that means that investors who didn’t want to spend extreme amounts of money on homes in 2021 will now have their chance.
Since the home-buying battles will start to retreat, investors can stop increasing their offers to weed out competitors. That said, with home prices slightly declining, determined investors can take advantage of their chance to purchase real estate.
As the inventory of available homes for sale has diminished in Philadelphia, homebuyers resorted to buying “fixer-upper” homes or buildings with the intent to remodel. Along with that, big-time developers have taken the opportunity to buy mixed-use property near popular attractions.
As we continue through 2022, further developments, additional construction, and newly renovated homes are sure to hit the Philadelphia housing market.
What Affects the Housing Market?
A few main factors affect the housing market in the United States. For example, the economy, supply and demand, and specific demographics. As such, it’s no different in Philadelphia, so let’s go over why these factors are so important.
- The Economy
- Supply and Demand
As you can imagine, the economy is one of the most significant factors of the housing market in the United States. Looking at the employment rate, manufacturing projects, and the price of goods are all good indicators of where the economy is. That said, when the economy is booming, the price of homes tends to increase.
Supply and Demand
Like any goods and services, supply and demand in the housing market work no differently. That said, a high or low supply of homes throughout the US can determine the pricing.
When many people are looking to buy homes, but the supply is low, it’s referred to as a seller’s market. However, when there are a lot of homes on the market but the demand is low, it’s called a buyer’s market. As such, investors are hoping for a buyer’s market in 2022.
Depending on where you are looking to purchase real estate, the prices of homes may differ. That said, location is one of the most critical factors in buying a home. So, even if the overall cost of houses increases across the US, some places may stay the same or decrease.
It’s imperative to consider the location while investing in real estate. So with that, some of the most popular areas to buy homes include those near schools, hospitals, and highways.
Looking for Rental Success in 2022?
Managing your rental property, especially if you own more than one, can quickly become overwhelming for investors who want to grow their business. However, one great way to keep track of all your properties while growing your business is by hiring a property manager.
Luckily, the local professionals at Bay Property Management Group are ready and eager to help you succeed. Our team of experts can help you with almost any aspect of your rental business, including tenant screenings, rent collection, eviction services, and more. So, if you are in need of full-service property management in Philadelphia, give us a call today.
Bay Property Management Group offers property management services in Baltimore, Philadelphia, Northern Virginia, and Washington, DC.