Would-be homebuyers in Philly to face another challenging spring season

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Purchasing a house in Philadelphia during the spring homebuying season will be tougher than last year, according to the January market report from real estate giant Zillow.

Philly’s housing market struggled to blossom last spring thanks to high mortgage rates and overvalued sale prices. That created an inventory crisis as homeowners stayed put rather than buying a new home with a more expensive mortgage.

That dynamic is still at play, said Zillow’s chief economist Skylar Olsen. The difference is there will be even fewer homes on the market this season. New listings in Philly are down 10.4% compared to last year.

“Nationally, we’re starting to see more options than we saw last year, but unfortunately in the Philly market and in a lot of Northeast markets, that’s not really the case,” said Olsen.

And it’s unclear when things might improve. The average rate for a 30-year fixed mortgage, the most popular home loan, is above 7% and is not expected to drop dramatically in 2024, said Olsen.

“That will honestly incentivize homeowners to hold and news listings are not expected to ramp up very quickly,” said Olsen.

At the same time, demand is high for the homes that are on the market, according to the report. Houses in Philly sold in 16 days on average in January, a month when there typically are not a lot of buyers.

That timeline is roughly twice as fast as closed sales took to complete nationwide.

“That’s usually something you don’t see until the height of the home shopping season so that lets us know that Philadelphia continues to be a hot housing market,” said Olsen.