CHESTER COUNTY, PA — BrightMLS’s May 2023 Market Report for the Philadelphia Metro Region sheds light on the current market conditions, and what to expect as both a buyer and a seller. Based on recent findings, the median home price in the metro region increased by 2.1% throughout the month of May. For the past 69 months, there has been an increase in the median home price values, indicating strong demand and low inventory while still maintaining affordability for the majority of residents.
However, increased home values do not necessarily mean a healthy market. The number of new pendings and new listings has dropped significantly compared to last year’s numbers. With new pendings having a drop of 21.1%, and new listings having a drop at 26.5% respectively. This drop, while not surprising given the low inventory currently seen in the market, is also the cause of the increased competition for buyers.
Market experts believe that a large group of people are currently considered “shadow buyers”. Shadow buyers are buyers who are able and willing to purchase a property, however, are remaining on the sidelines until interest rates drop to a more reasonable level. Similarly, there are “shadow sellers” in the market—sellers who want to move but find themselves stuck due to highly competitive mortgage rates. Therefore, the hope is that once interest rates do drop (which is expected to occur closer towards the end of the year), that a healthy number of both buyers and sellers enter the market. Given this hope, the outlook still indicates a seller’s market throughout 2023 and potentially even into early 2024. However, there is hope that the spring market in 2024 will be much more typical than the past years.
One positive aspect, particularly from the seller’s perspective, is that the Days on Market has remained relatively stable. So, for the seller’s that are making moves in the current market conditions, they are only needing to wait an extra 2 days for their home to sell. However, buyers continue to face challenges in finding suitable properties. Growth in active listings came to a halt after 8 months of steady increases. Attached homes are the only property type that had an increase, while single-family detached homes had the most limited inventory with just 25% of the level seen in May of 2019.
Analyzing the market at a more local level, the numbers appear less daunting than the average figures. For example, Chester, Delaware, and Bucks County all experienced growth in median sale prices, with increases of 8.1%, 3.8%, and 2.7%, respectively. When considering the Median Days on Market, Chester County saw a one-day increase, while Delaware and Bucks County remained unchanged compared to the previous year. In terms of Active Listings, only Bucks County witnessed a decrease of 6.7%, while both Chester and Delaware counties saw increases of 15.6% and 6.4%, respectively.
Based on my own research using BrightMLS’s data, I compiled specific data for Bucks, Chester, and Delaware County throughout the month of May to gain a more focused understanding of the area’s performance. This data covers a price range from $10,000 to 10,000,000 providing a more comprehensive snapshot of the market’s pricing.
Units Listed: 1,951
Units Sold: 1,553
Average Sold Price: $498,851
Monthly Supply of Inventory (MSI): 1.7
Days on Market: 20
Based on this data, 78% of homes listed in May were sold. Comparing these figures with the previous month’s market report, there is a notable increase in the percentage of homes sold. In April, only 68% of listed homes found buyers. Additionally, the number of homes listed in April was just 570, whereas in May, 1,951 homes entered the market, suggesting an improvement in local inventory levels.
The most interesting aspect of May’s data is that the average sold price decreased by 8%, moving from $539,178 in April down to $498,851 in May. Meanwhile, the Monthly Supply of Inventory decreased from 1.8 to 1.7, and the Days on Market followed a similar trend moving from 19 in April to 20 in May. This data is important to note because it indicates that in May it would take a shorter time for the current amount of homes on the market to sell, but yet there is a longer length of time that homes are staying on the market. Although these changes are relatively small in the larger context, they provide interesting insights into the local market dynamics.
To summarize, the May 2023 Market Report provides important insights into the real estate market in the Philadelphia Metro Region. While median home prices continue to rise, the decline in new pendings and listings poses challenges for both buyers and sellers. However, experts anticipate a more favorable market once interest rates drop, leading to increased activity and a balanced market. Although the current situation favors sellers, there is hope for a return to a more typical market in the spring of 2024. Overall, the report highlights key trends and offers valuable information for those interested in the Philadelphia real estate market.
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