Philadelphia is one of America’s proudest and most historic cities. It has played a prominent role in the birth and growth of the United States and remains of major economic importance to this day. Philadelphia hasn’t traditionally been one of the more expensive real estate markets in the area, with nearby New York City, New England, and Connecticut most often holding that title. But the Philadelphia market has grown more expensive in recent years, with 2020 marking a major surge and 2021 continuing the consistent growth.
Winter often marks a slowdown for real estate markets across the countries, particularly in colder regions like Pennsylvania. But as we move towards spring, buyer activity begins to pick up and resume its fervor. Let’s look at the shape of the Philadelphia and Pennsylvania market as we enter the spring of 2022.
Philadelphia Breakdown
Philadelphia’s market had begun to exhibit signs of rapid growth before the pandemic, but the changes brought on by the past couple of years have kicked everything into overdrive. The Philadelphia real estate market is traditionally one of the less expensive major American metropolitan cities, but there are signs this could be shifting as prices rise and sales increase. Let’s look at how Philadelphia has changed in 2021 and what it may mean for 2022.
According to the Philadelphia Magazine, the sales pace of homes in the city’s metro area remained rapid. The number of homes sold in the eight-county core that makes up the metro area was 2.3% off the pace of 2020, so it was a slight cooldown from the market’s highs immediately following the first wave of the pandemic. However, that pace was still 20.8% higher than in 2019.
Prices also continued to rise in 2021. According to Norada, the median sales price of a home in the Greater Philadelphia housing market was up to $304,000 at the end of 2021, an 8% increase year-over-year. An 8% increase is, in itself, not a massive change, but this comes on the heels of 2020, where prices surged dramatically, so continued increases show it was no fluke.
Affordability may start to become a prominent problem in Philadelphia. The same report from the Philadelphia Magazine showed that the median home price in the city is now 4.5x the median household income, meaning the average person can’t afford a home. Despite this, homes moved quickly. According to the Norada report, the median time homes spent on the market in the Philadelphia area was 11 days, with 49% of homes being sold in 11 days or less.
The Philadelphia market is a seller’s one right now, with homes being sold extremely quickly and prices rising. While conventionally a cheaper market for a major city, affordability now appears to be a serious problem for the city moving forward.
Breaking Down Other Areas in Pennsylvania
Philadelphia isn’t the only major real estate market in the state. Several other significant cities across Pennsylvania have also dealt with the topsy-turvy state of the market. Across the state, several of the cities are experiencing significant growth and becoming more competitive markets. Let’s explore some of the other cities in Pennsylvania that are experiencing shifts in the market.
Pittsburgh is Pennsylvania’s second-biggest city, a significant market on the west side of the state. Pittsburgh has seen its population decline in the past decade, but its real estate market is strong and competitive. According to Roofstock, home values in Pittsburgh have increased by 14.5% over the last year. This is significant growth for one year, but it marks a sustained growth trend. Home values in Pittsburgh have risen 63% in the last five years.
Allentown is one of Pennsylvania’s biggest cities and a rapidly growing market that has seen home values rise significantly in the past year. According to Realtor.com, in January 2022, the median listing home price was $220,000, an increase of 22.3% year-over-year. This is massive growth, and Allentown is becoming a heavily competitive city. Erie is another major Pennsylvania city that saw prices rise, with homes growing 4.3% since January 2021.
Overall, prices are rising across Pennsylvania. It is a state where prices have traditionally been on the lower end, especially in states like New York or Massachusetts. But with many regions around the state seeing their prices rise, Pennsylvania is likely to see affordability decline as we move into spring of 2022.
