2023 Pennsylvania Housing Landscape: Is A Decline on the Horizon?

A transformative phase is evident in the Pennsylvania real estate market. As of April 2023, there has been a slight increase of 0.3% in the median sale price compared to the previous year. Concurrently, there was a notable 24.2% decline in the number of properties sold. This shift could be attributed to mortgage rates finding their equilibrium at 6.79%, prompting new entrants to explore the market.

Though Pennsylvania’s property landscape seems to be heating up, one can’t ignore the underlying uncertainties tied to potential escalations in interest rates and a possible downturn in the housing sector.

Snapshot: Pennsylvania’s Housing Dynamics

Buyer’s Dominance: Following the fevered pace of the post-pandemic era, the current slower trajectory hints at a possible 20% decrease in property values in Pennsylvania.

Skyrocketing Mortgage Rates: From April 2021’s rate of 3.12%, mortgage rates soared to 6.79% in June 2023.
Gradual Return of Sellers: Property listings have surged by 95.36% from December 2022’s 6,427 listings.
Extended Sale Periods: On average, properties linger on the market for 29 days, a significant increase from the previous year.

Key Metrics of Pennsylvania’s Real Estate Landscape:

Median Sale Price: $265,800 (an uptick of 0.3% YoY)
Homes Sold: 9,293 (a decline of 24.2% YoY)

Source: Redfin.com

This recent data mirrors the national trend of increased demand with a sparse supply. As property sales decrease statewide, property prices have surged.

Insights into Pennsylvania’s Housing Data:

Average Property Prices: As of now, the average median property price stands at $265,800, marking a 0.3% YoY increase. There’s a forecasted drop of around 4% in the median sale price for 2023, a phenomenon not seen since 2012. Currently, the sale-to-list price ratio is 99.2%, decreasing by 1.8 pt YoY as of April 2023.
Property Sales Data: April 2023 witnessed a 24.2% YoY slump in property sales, translating to 33,566 homes sold, which is less compared to 37,366 in April 2022.

Average Rent: In 2023, tenants are paying an average rent of $1,626.
Pending Sales: A 0.8% increment in pending home sales was observed in February, marking the third consecutive monthly increase. At present, there are 19,906 pending property listings in Pennsylvania.
Time on Market: Homes remain on sale for an average of 29 days, an increment of one day from the previous year.

Will the 2023 Q2 Witness a Drop in Property Prices? Contrary to some expectations, the second quarter of 2023 may see a surge of 8.08% in median sale prices, despite being 2.5% down YoY. The property market will likely continue its warming trend amidst rising mortgage rates and prevailing economic uncertainties.

Predicting Pennsylvania’s Housing Trajectory for the Upcoming 5 Years: Property prices have soared by an impressive 46.6% over the last five years. Yet, this rapid growth is expected to taper off in the foreseeable future. Rising mortgage rates may deter potential buyers, causing a reduction in demand, thereby slowing the rate of home value appreciation.

Should One Sell or Buy in Pennsylvania Now? Given the current uncertainties, whether 2023 is a buyer’s or seller’s market is tough to determine. High mortgage rates deter many potential buyers, while a limited inventory suggests a reluctance among sellers.

For those considering selling their Pennsylvania homes, the environment remains favorable, given the existing high property prices. However, this decision should align with individual circumstances, like the need to relocate, upgrade, or downsize.

Navigating Pennsylvania’s Housing Market in 2023:

For Sellers:

Competitive Pricing: In a gradually slowing market, setting a competitive price can attract quick and optimal offers.

Incentives for Buyers: Consider offering buyer’s closing costs, repair discounts, or even a home warranty.
Listing Platforms: Utilize platforms like MLS for broader exposure.
Cash Buyers: Consider direct cash buyers. While they offer fast deals, they might value your home below its market worth.

For Buyers:

Property Value Consideration: In a slower market, properties might depreciate before they appreciate again.
Avoiding Extremely Cheap Offers: Beware of properties priced too low, as they might hide significant issues.
Avoid Short-Term Investments: In a slow market, buying homes for short-term sales (flipping) can be riskier.

Seek Advice: Engage with real estate agents who understand Pennsylvania’s market dynamics.

2023 could be a watershed year for Pennsylvania’s housing market, with several conflicting indicators suggesting both growth and a potential downturn. Buyers and sellers must carefully evaluate the landscape, consulting experts before making critical decisions.