Residential real estate market improving - slowly
An industry observer says it would be further along in a normal recovery but low inventory is holding it back
“There are just less houses for sale. The high end is very, very slow. Houses in the $200,000 to $450,000 range move very quickly but there just aren’t enough of them.” – Steve Storti, chief marketing officer at Berkshire Hathaway
The region’s real estate market in the first nine months of the year continued its slow and steady rebound from the recession of 2007 but activity remains below what some industry experts expected by this time in the recovery. First, the good news. Home sales in the Greater Philadelphia region continued to grow through the first nine months of 2016, showing a 9.5 percent increase over the first nine months of 2015, with 59,744 homes sold in the first nine months of 2016, compared to 54,562 in 2015 and 47,253 in the first nine months 2014.
The data, provided by Berkshire Hathaway HomeServices Fox & Roach in its HomExpert Market Reports, show a continuous growth pattern and steady improvement in the housing market and consumer confidence.
Still, the pace is lagging compared to other recoveries and what people in the business thought they would see by now, said Steve Storti, chief marketing officer at Berkshire Hathaway. The culprit? Low inventory. “We’re predicting continued slow growth, mostly because of low inventory,” Storti said.
“There are just less houses for sale. The high end is very, very slow. Houses in the $200,000 to $450,000 range move very quickly but there just aren’t enough of them.
“We would expect to see more at the point in the recovery,” Storti lamented.
According to the report, median home prices across the region were up by 0.5 percent, going from $220,000 in 2015 to $221,000 for the first nine months in 2016.
Monthly average inventory showed a decline by 12 percent from this time last year, with 33,422 homes on the market in the first nine months of 2016, compared to 37,989 during the same period in 2015. Average days on the market have continued to shrink by 5.5 percent from 75 in the first nine months of 2014, to 73 days in the first nine months of 2015 to 69 days in the first nine months of 2016.
“While inventory continues to remain low and average days on the market is steadily declining, it remains a seller’s market,” said Storti. “Home sales rose steadily over the last few years, which is a strong indicator that with continued reasonable interest rates and a stronger economy, the market will continue to see good activity over the coming year.”
The report found existing home sales increased across the board, with Philadelphia County boasting the highest number of homes sold in the first nine months of 2016 with 12,179, a 13.5 percent increase compared to 10,732 homes sold the same time last year, followed by Montgomery County (8,403, +6.6 percent), Bucks County (6,084, +4.6 percent), Chester County (5,293, +1.3 percent) and Delaware County close behind (5,140, +.93 percent). Camden County had the largest percent increase in the number of properties sold at 17.5 percent, jumping from 4,117 in first nine months of 2015 to 4,838 properties sold in first nine months of 2016.
Chester County posted the highest median sale price in the first nine months of 2016 at $315,000, an increase of 0.3 percent from 2015, followed by Bucks County ($280,000, +0.0), and Montgomery County ($269,000, +3.1 percent). Philadelphia County posted the largest percent increase in median sale price in the region, jumping 7.6 percent from $158,000 to $170,000. Salem County posted the largest decline in median sale price, with a decrease of 8.8 percent at $125,000 in the first nine months of 2016, compared to $137,000 from last year at this time.
Inventory remains low across the region compared to the same time last year down by 12 percent. Philadelphia County posted the highest percent decrease in monthly inventory by 20.6 percent (5,884 properties), followed by Bucks County (3,090, -17.7 percent), Montgomery County (3,909, -6.0 percent), Mercer County (1,902, -15.4 percent), and Delaware County (2,810, -13.1 percent).
“We probably underestimated the effects of 2008,” Storti said. “People are holding back, they may not have enough equity built up” to consider moving up in a house.
Other highlights from the 12-county region:
• Chester County’s Easttown Township had the highest median price at $617,000 (-1.3 percent decrease over last year), followed by West Pikeland Township at $567,500 (a 14.1 percent increase over last year’s numbers) and West Vincent Township at $500,536 (a 6.5 percent from last year).
• Bucks County’s highest median sale price was in Upper Makefield Township at $704,325 (+10.1 percent), and Montgomery County’s Bryn Athyn Borough at $700,000 (+15.2 percent), and Princeton in Mercer County at $880,000 (+6.7 percent).
• Montgomery County posted the highest number of single family homes sold in the first nine months of 2016 at 5,194 (a 6.3 percent increase from the first nine months of 2015), followed by Bucks County with 4,253, a 3.5 percent increase, Camden County with 3,696, a 16.7 percent increase, Burlington County with 3,597 single family homes, up 13 percent from the same time last year, and Chester County with 3,470 homes sold at a 2.5 percent decrease from the first nine months of 2015.
• Home sales in the Main Line increased from 2,253 homes sold in the first nine months of 2015 to 2,319 homes sold in the first nine months of 2016, up 2.9 percent. Median home prices saw a slight increase of 1.4 percent from $409,000 to $410,500 in this year’s period.
• Philadelphia County posted the highest number of townhouses and row homes sold in the first nine months of 2016 at 8,279, a 12.5 percent increase from the first nine months of 2015, followed by Montgomery County (1,880, +7.7 percent), Chester County at 1,252 (+10.5 percent), and Bucks County (1,139, +8.6 percent).
• Pennsylvania led the Tri-State region in highest median sale price in the first nine months of 2016 at $240,000 (+2.1 percent), followed by Delaware at $213,725 (+1.8 percent) and New Jersey at $186,000 (-2.1 percent).
A home for sale on West Pleasant Grove Road in Westtown.
A house sold on West Miner Street in West Chester.
A home for sale in Concord Township in Delaware County.