What is Happening in the Philadelphia Real Estate Market?
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As a of Record and Owner of The JRS Realty Group in the Greater Philadelphia Real Estate market, I am often asked about the real estate market. Questions like, “How is the Real Estate market”? and “Are we going to see another crash?” are common.
What is Happening in the Philadelphia Real Estate Market?
Thinking about Philadelphia, PA specifically, my answer is that the real estate market is still the hottest it’s been since 2004, 2005 or just before the crash of 2006/2007.
What goes up, must come down? Well, not so fast.
Yes, the interest rates are steadily climbing upwards of 7% and probably won’t stop until we see 8% interest rates before they start coming back down. Keep this in mind, that even 8% interest rates are still historically very low. In 1981 interest rates reached an all-time high in the United States at 16.63%.
Will the Philadelphia Real Estate Market Crash?
Borrowing money is still cheap, however, the guidelines for lending have become stricter. So, to answer the second question above, “will we see another crash?”.
No, I do not believe we will see another crash with all the foreclosures and short sales that happened after 2007.
The reason that happened before was because of sub-prime lending practices. No financials or proof of income was needed, so those buyers were going into default because of that reason alone, not because of home values.
What Changes are Happening in the Philadelphia Real Estate Market?
As a listing specialist for my brokerage, we are seeing pricing reductions in most areas.
This is because listing prices were overinflated from the start. Just because the market is red hot, you cannot pick a number out of the sky because “you think” your home is worth that much.
As a real estate professional, it is my job to educate the consumer on the right price analysis. This means using comparable or similar style homes with very comparable size, square footage, location, bedrooms, and baths. This includes the condition of the property.
Most buyers have been offering above the asking price in the Greater Philadelphia area for a while now. This was necessary due to low inventory and high buyer demand vying for the same homes.
When there is low inventory and high buyer demand, prices go up. When there is high inventory and low buyer demand, prices come down.
Predictions for the Philadelphia Housing Market
Most people will think home prices will go down soon, following the interest rate hike. I predict home prices will stabilize, and come back to normalcy.
Yes, with the rising interest rates, most buyers buying power will be significantly reduced. When someone could afford $450,000 at a 3% interest rate, they now can only afford $325,000 at 6%.
Owning Real Estate is still one of the best investments one can make to build long term wealth and build equity.
So if you are looking to sell your home, I would reach out to my office for a free “pricing it right” market evaluation. While we are out to visit your home, we can go over things that should be done and, more importantly, things that should not be done.
The real estate professional you decide to hire will either be responsible for making you thousands or costing you thousands. You must choose wisely. On a short note, this changing market is making Realtors and Mortgage Lenders in the thousands close their doors for business. Choose a Realtor & Brokerage who has a track of success over decades, not months.
