Philly housing market is top 10 in growth potential in 2024, Realtors say – The Philadelphia Inquirer

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The Philadelphia region is one of the country’s top 10 markets with the highest potential for strong growth in home sales next year because of pent-up demand and supply, according to the National Association of Realtors.

After two years of “subdued activity,” the association expects the national housing market to do better in 2024. In the trade group’s analysis of the 100 largest metropolitan areas, the Philadelphia metro came in at No. 8 and the Harrisburg metro ranked No. 5 for markets that should see more activity next year and outperform other metros.

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» READ MORE: The resilience of Philly’s real estate market is ‘impressive.’ Test yourself on national market trends.

The market that includes Philadelphia, Camden, and Wilmington is set for a market boost driven by both buyers and sellers, according to a report the National Association of Realtors released last week.

Economists expect mortgage interest rates to keep dropping next year, which should bring in more buyers who had been priced out of the market and more homeowners who were locked into low rates that kept them from moving and selling.

The Philadelphia region had twice as many properties that first-time home buyers could afford in October compared to other metro areas, the Realtors association said. And 44% of homeowners have lived in their properties longer than the region’s average of 17 years. That’s a higher share than the country as a whole and points to a population that could choose to sell if market conditions improve.

Al Perry, president of the Pennsylvania Association of Realtors and a real estate broker who works in the Greater Philadelphia area, said he was excited that the national association called out the Philly metro.

But he said he wasn’t really surprised because of the region’s relative affordability, its population of potential buyers, its position between New York and Washington, and its abundance of walkable communities, jobs, and recreation.

“Sometimes we take how cool we are for granted,” Perry said. “Our area has got a lot to offer and will continue to grow, and [Philadelphia] will be a big part of that.”

Making the top 10 markets

The National Association of Realtors made its top-10 list by considering what it knows about local housing markets and looking at 10 factors that could set them up for success next year. Compared to the country as a whole, the Philadelphia area had a similar or higher:

  1. share of buyers who would return to the market if mortgage rates drop to 6.5%

  2. share of renters who can afford the median-priced home (which was $368,500 in the Philadelphia area this summer)

  3. growth in home prices between summer 2022 and summer 2023

  4. share of owners who have been in their homes for longer than the average time period

  5. share of affordable listings that first-time buyers can afford

  6. drop in the share of workers working from home from 2021 to 2022

  7. job growth

  8. share of high-income millennial renters moving in from out of state

The Philadelphia region performed worse than the country as a whole for wage growth as of September and for the violent crime rate in 2022.

“Jobs and safety are huge in any real estate market,” Perry said. He said he’s excited about Philadelphia’s incoming police commissioner, the sense of optimism that a new city administration ushers in, and Mayor-elect Cherelle Parker’s focus during her campaign on crime and public safety.

“We’re still listed as one of the bullish markets” even though the region trails in wage and crime statistics, he said. “It speaks to Philadelphia’s desirability in general.”

» READ MORE: Philadelphia’s ‘real minimum wage’ is among the worst in the U.S

Reasons for market optimism in 2024

Many entry-level buyers in the Philadelphia market are on the sidelines because of interest rates and the low supply of homes for sale, Perry said.

“I think they’re just waiting for some signs to jump in,” he said.

» READ MORE: Record low housing supply across the Philly area will continue to challenge buyers (From 2022)

Perry predicts that they’ll get two of them: more homes for sale as more homeowners decide to sell and lower mortgage rates.

Low inventory has been a persistent problem across the state and country. People who need to sell their homes because of a job move or change in family situation have been selling. But those who want to move but don’t need to move have been staying put. More should decide to sell next year.

Mortgage rates are trending down after the average rate for the popular 30-year fixed loan reached 7.79% in late October.

The National Association of Realtors predicts that the average mortgage rate — which fell to 6.95% last week — will drop to around 6.6% in the second half of 2024. If it does, nearly 4.5 million households will be able to afford the median-priced home, according to the association.

The trade group predicts rates will hit 6.3% next year.

» READ MORE: Shopping around for a mortgage could save Philly-area buyers thousands of dollars per year

Harrisburg and other markets to watch

Like the Philadelphia metro area, the one that includes the Pennsylvania municipalities of Harrisburg and Carlisle is also affordable compared to other parts of the country, which is one reason it made the top-10 list of markets set up for success next year.

Nearly one-third of renters can afford to buy the median-priced home there, a higher share than in any of the other nine markets and the country as a whole. This summer, the median sales price for a home in the Harrisburg metro was $268,200.

» READ MORE: Philly-area buyers need to make thousands of dollars more than last year to afford a starter home

The Harrisburg region also is attracting a lot of high-earning millennials from other states — potential buyers. On the potential seller side, 42% of homeowners have lived in their homes beyond the region’s average of 15 years.

Jodi Diego, a district vice president of the Pennsylvania Association of Realtors and past president of the Greater Harrisburg Association of Realtors, said she expects the market to open up in the first few months of next year.

“I feel we’re going to be making that turn, and things are going to continue to be strong,” she said. “I’m just excited for people wrapping their heads around the way things are in our marketplace.”

» READ MORE: Pennsylvania has the top five places in U.S. News’ latest ranking of America’s ‘100 best places to retire’

Homeowners are becoming more comfortable with the market and the idea of selling. She sees a lot of growth happening in central Pennsylvania with a range of populations moving in, including first-time buyers, move-up buyers, and seniors heading to “up and coming” retirement communities, she said.

This year, U.S. News and World Report ranked Harrisburg as the best place to retire in the country.

“There’s a resurgence in our little towns and main streets,” Diego said. And new and established residents enjoy the region’s restaurants and entertainment options and the walkability and sense of community in many towns, she said.

» READ MORE: More citified ‘Main Streets’ coming to a suburb near you

Also on the National Association of Realtors’ top-10 list of metropolitan areas with lots of pent-up demand that are set to outperform other metros next year:

  1. the region of Washington along with Arlington and Alexandria in Virginia

  2. the Portland, Maine, area

  3. the Nashville area

  4. the Dayton and Kettering area in Ohio

  5. the Durham and Chapel Hill area in North Carolina

  6. the Dallas, Fort Worth, and Arlington region in Texas

  7. the Houston, Woodlands, and Sugar Land region in Texas

  8. the Austin, Round Rock, and Georgetown region in Texas

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