I just want to know if it’s still a buyer’s market in Northeast Philadelphia or if it’s a seller’s market yet.
I know I sound like a broken record when I talk about “market correction.” In the early 2000s, housing prices escalated at a quicker than average rate and it’s been taking some time to adjust that anomaly. As a result, the Northeast has been hanging tight, but mostly in a buyer’s market the past few years, and we’re all still waiting to see a seller’s market again. But we are starting to see signs of a recovery.
The way to track what is currently happening in Northeast Philadelphia is to calculate the “absorption rate” to analyze the numbers. The absorption rate calculates the rate at which the market eliminates the available housing inventory. So if the absorption rate is six months, it would take six months to sell off the current inventory if no other homes were to go up on the market.
Inventory Accumulation for the Last 12 Full Months in Northeast Philadelphia
Around six months’ worth of inventory is considered a “balanced market.” Anything above six months inventory hanging around suggests a buyers market, and below six suggests a sellers market. This number will rise and fall, but we’ve seen an inventory accumulation of six months repeatedly in calculating the absorption rate over the past few years, but Northeast Philadelphia as a whole has not seen anything below six months for the past few years.
While the majority of the Northeast is hovering around six months’ worth of inventory, there are, in fact some zip codes in Northeast Philadelphia that differ (see chart above).
So the Far Northeast is doing much better than the lower Northeast. Will we see prices rise in the Far Northeast as a result? We’ll see. Prices are still low and rates are remarkably low so, in terms of affordability, it remains one of the best times to buy. Hopefully as the inventory gets lower, and buyers start to feel more of the urgency to buy, we should see our sold prices slowly start to rise in the next few years.
Stacey McCarthy is a real estate agent with the McCarthy Group of Keller Williams. Her Real NEastate column appears every Wednesday on NEastPhilly.com. See others here. Read other NEast Philly columns here.
Inventory Accumulation figures are only calculated when Report End Month is the current month.
*Current Inventory is based on the actual available properties on the date this report was created.
**Average Monthly Sales is the average sales for the last 12 full months
***Inventory accumulation (in months) = Current Inventory Units / Average Monthly Sales
2013 TREND MLS – Information Deemed Reliable but Not Guaranteed.