The previous year saw a mad rush of home buyers but 2022 predictions for the Pennsylvania real estate market point to a slower, more balanced market climate.
“As we move through the year, we will see slower sales activity. Intense multiple-offer days are over…people can take their time,” said Lawrence Yun, chief economist of the National Association of Realtors.
Three factors are seen to affect this year’s market:
- ewer houses available for sale
- Higher sales prices among homes
- Rising mortgage rates
According to the Pennsylvania Association of Realtors, the state is currently a seller’s market. This means:
- There are fewer houses for sale to meet the demand for Pennsylvanian homes. This means more competition among buyers.
- More competition among buyers could mean fierce bidding wars among them as they jostle for the available house stock. As a result, sellers will have several choices among multiple bids
- Sellers have the edge in home price negotiations. They are more likely to get more than their registered sale price at the close of the deal.
Pennsylvania real estate as a long-term investment
2021 ended with strong sales figures, although not as stratospheric as the feverish buying spree that occurred in the previous year. PAR’s December 2021 report reveals that median home prices in the Keystone State were up by 37% compared to 2017 figures, cementing the idea that homeownership is great for long-term investment. But the market is still correcting itself as home sale prices are seen to slide slightly lower to more reasonable levels this year.
Housing inventory still scarce
As with many other states, Pennsylvania is still grappling with a dearth in its housing stock. The December report states that listings for December 2021 went on a 26% decline year-on-year, resulting in home sales also going down by 5.5% in the same period.
Sales increase before March
As of the moment, interest rates remain unchanged at around 0% to 0.25%. While at these levels, some buyers who stood on the sidelines last year will be jumping at their last chance to enjoy these lower interest rates in mortgages before the Feds’ next meeting in March when the agency announces its planned rate hike.
Once the new rates set in, fewer buyers are expected to come in to make home purchases. With this comes a return to balance between supply and demand in the state’s real estate market. Home prices are still seen to increase, but only by a fraction of what was witnessed in 2020 and 2021.
Pockets of affordability
One must note that not all parts of the state are seeing home sale prices that sometimes tend to go beyond the average Pennsylvanian’s budget. There are still areas where homeownership is a better option than renting. In Allegheny County, for example, what you earn in a week still outweighs how much a home will cost. If you would rather rent, you may want to consider signing a lease in Philadelphia County, where rent is only 29.3% of your average salary.
New homes in old neighborhoods
According to the National Association of Home Builders, one in four new homes were built in older, more established communities. From this stock, 19% were infills – buildings developed in underutilized parts of a neighborhood. Meanwhile, 6% were teardowns – houses built on a lot after an older house on the same space was demolished.
In Mid-Atlantic states, including Pennsylvania, 39% of homes built in 2020 can be found in infills or teardowns. This fresh supply of homes is helping to add to the current inventory and is giving more people a chance to achieve homeownership. That is, if they know where to look.
Demand for homes in resort-style settings
As people continue to work from home, Redfin expects that demand for a second home – whether to use as a rental property or as a vacation home – will remain high in 2022.
In Pennsylvania, one in-demand vacation spot is the Poconos. It is ranked as the third-best place in the country to buy a winter vacation home, primarily due to its affordable median home price of $274,500. And it isn’t just a winter spot – the mountains provide you with year-round activities that don’t always require snow.
Let RE/MAX Direct be your guide
As the Pennsylvania real estate market finally relaxes from the frantic activity of previous years, both home sellers and buyers will need an expert guide to help with navigating the road ahead.
We can be that guide.
To schedule a consultation with our real estate experts, call RE/MAX Direct at 610.430.8100 or send an email to remaxdirectwc(at)gmail(dotted)com. Let’s make your real estate transaction an easy and stress-free one.