Philly remains a city of homeowners amid sharp drop in residential property sales

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Home sales in Philadelphia declined nearly 40% last year compared to the prior year, according to a new report from the Pew Charitable Trusts.

In 2023, a total of 15,617 homes were sold — nearly 10,000 fewer than 2022, a banner year for home sales in Philadelphia.

The report attributes the “exceptional” uptick in 2022 to low interest rates and other “pandemic-related” trends, including the increase in people working from home.

“It was one of the highest numbers of sales that we’ve had since the Great Recession,” said Katie Martin, lead researcher on Pew’s latest “State of the City” report.

Affordability is one of the main issues causing the dip in sales. The average rate for a 30-year fixed mortgage is hovering around 7% — more than double the rate locked in by homeowners who refinanced during the pandemic.

Last year’s total was the lowest since 2015, but Martin said it is still in line with historic totals for Philadelphia. Between 2013 and 2023, an average of 18,594 homes were sold in the city, according to the report.

“I’m not sure I could say what’s gonna happen next with home sales in the city,” said Martin.

It’s unlikely home sales will return to 2022 levels anytime soon.

Similar to other cities around the country, Philadelphia is experiencing an inventory crisis as homeowners continue to stay put instead of purchasing a new property with a higher mortgage rate.

“It was bad last year and it’s just as bad this year. No real improvement,” said Mark Zandi, chief economist at Moody’s Analytics.

In March, there were 3,760 active listings, according to federal data, compared to 4,469 in October 2023 and 5,084 in October 2022.

Permits to build single-family homes have also declined, according to city data. Between 2021 and 2023, the total number of permits issued dropped by half — from 1,153 to 547.

This means it’s a hectic time for realtors.

Maria Quattrone, owner of RE/MAX@HOME, said she spends a lot more time reaching out to buyers and sellers with hopes of making a sale happen.

“You have to do more to get the same result. And if you want a better result you have to do two or three times as much,” said Quattrone.

“It reminds me of the Great Recession,” she said.

But despite the drop in home sales, homeowners continued to outnumber renters in the city.

In 2022, the latest year for which data is available, there were 353,535 owner-occupied properties in Philadelphia, according to Pew. Renters occupied 311,986 properties.

That translates to a 53% homeownership rate.

“The number of renters has been increasing in tandem with the number of homeowners,” Martin, the Pew researcher, said. “But it remains to be seen whether the number of renters will outpace the number of homeowners.”

In more expensive cities such as Boston and New York, the homeownership rate is under 40%, according to U.S. Census data. The rate in Washington, D.C., is just above that mark.

“We’re kind of an outlier,” Martin said. “Most cities in the Northeast are not actually majority homeowner, they’re majority renter.”

In more expensive cities such as Boston and New York, the homeownership rate is under 40%, according to U.S. Census data. The rate in Washington, D.C., is just above that mark.

Monthly rents in Philadelphia remain historically high.

In March, the median rent for a one-bedroom apartment was just under $1,500, according to Zumper. The median rent for a two-bedroom place in the city was $1,750.