What appeared to be a city finally recovered from the housing crash of 2008, Philadelphia’s real-estate market is now once again in turmoil due to the coronavirus pandemic.
Before the start of the pandemic, the first few months of 2020 seemed very promising. Even in March, as the pandemic soon came to fruition, median home prices rose to an astonishing 10% higher than the same time last year, according to Bright MLS. Philadelphia hadn’t seen this rate of home buyers increase in the last ten years.
As coronavirus began halting in-person open house showings, however, listings soon saw a steep decline. March through April is regarded as one of the peak months for real-estate, yet listings across the country decreased by nearly 20%. Philadelphia witnessed a more troubling decline at almost 43% fewer listings. This is also due to news of many missing mortgage payments due to rampant job loss, scaring homeowners unwilling to take that risk.
Buyers also seem to be stalling until restrictions on in-person activities relax. Danielle Hale, Chief Economist at realtor.com, stated that people are generally reluctant to buy real estate if it’s “unclear…when you’ll get to visit the property.” In fact, according to a National Association of Realtors survey, roughly 60% of buyers and sellers are delaying jumping into the housing market for a few months. There has also been a concern with housing affordability for buyers, as steep unemployment rates and low savings account interest rates may dampen post-pandemic demand.
Thankfully, this isn’t all bad news for Philadelphia. With internet use becoming more of a necessity, president of MyHouseDeals digital platform, Alex Soars, observed “healthy levels of search activity and networking” related to the housing market. Along with this, buyer demand has not waned in the slightest—mortgage interest rates are at historic lows, attracting a plethora of people wanting to take advantage. According to experts, what’s most likely poised to occur is a busy season once activities resume to normalcy.
On May 19th, Governor Tom Wolf did announce a statewide real-estate reopening along with a guidance plan. Unfortunately, with much anxiety and many restrictions placed on the process, it has been a slow recovery for the market. Even so, three months later, improvements are occurring. Statewide stay-at-home orders were lifted in early June, causing mortgage applications to purchase homes rose 5%, according to the Mortgage Bankers Association. The sharp increase is very promising for the recovery of the market, and many experts expect the purchase market as a whole to keep gaining traction.
These last few months have been understandably trying for most, but Pennsylvania must look to recover financially in tandem with caring for its citizens well being. As regulations lessen, eventually, activities will return to normal, and homeowners and homebuyers will once again be able to conduct business. It is no question that the market will assuredly recover at one point in time—the real concern is when?