Still hot sales, lots of new apartment buildings and real estate prices that are climbing out of reach for many.
2021 had to be better than 2020, right?
And although everyone has now pulled out their pearls of worry to anger about the Omicron COVID variant, inflation, or both, it was. Even if it didn’t fly as high as in 2019, 2021 was another prime year for real estate and development here. Here are my picks for the top development and property events in the Greater Philly housing market in 2021.
1) The rapid pace of sales is starting to cool, but prices continue their steeper rise.
The COVID lockdown in early 2020 proved to be a speed bump for the fast-moving residential real estate market in the greater Philadelphia area. And for most of the year sales continued at a rapid pace, but there were signs of a slowdown. BHHS Fox & Roach Realtors’ November 2021 sales data shows that sales pace in the eight-county core Philadelphia market is down 2.3 percent year-over-year but 20.8 percent year-on-year before the pandemic broke out .
And houses were flying off the shelves even faster than in 2019 and 2020: house sales in the area took an average of just 27 days, and it took just 1.4 months to sell each house on the market in November – 30 percent less inventory than in 2020 and 61 percent lower than in 2019. But those inventories and the days on the market are slightly higher than in summer. The average days in the market increased slightly from August 21, and the home supply also increased 0.1 months compared to August. Drexel University real estate guru Kevin Gillen wrote at the end of the second quarter that sales were showing signs of slowing, in part due to the low inventory of homes for sale.
However, this low inventory level continues to contribute to a sharp rise in property prices. The average home sale price in the eight-county market passed the $ 300,000 mark in November. The median sales price of $ 310,000 is 10.7 percent higher than last November and 25.2 percent higher in 2019. The median sales price rose 10.3 and 28.5 percent, respectively, to $ 375,169.
2) The construction of multi-family houses is spreading outwards from the Center City.
For some years now, apartment buildings and condominiums, both new and converted office buildings, have made up the majority of the growth in the housing stock and the residential population in Center City. But over the past year they have started creating a larger proportion of the new housing outside the center.
The biggest developments that came on stream this year included two in West Poplar: Broadridge, RAL Properties’ 478-unit rental apartment building where Broad Street, Ridge and Fairmount intersect, and The Poplar, Post Brothers , the conversion of a historic Strawbridge & Clothier warehouse into 285 homes five blocks east of Broadridge. In South Kensington, north of Girard Avenue, there are now several large multi-unit rental apartments that opened for the first time last year, and parts of the city further out have also gotten a piece of them: for example, two smaller five-story apartment buildings opened in Germantown their Doors Avenue in Mt. Airy this year too.
Major projects that will open their doors in the next year or so include: LVL North, the Alterra Property Group’s largest modular apartment building to date on Broad and Spring Garden streets, and Piazza Terminal, the first to be built from scratch Project for Post Brothers, just up the street from their piazza complex in Northern Liberties. The city’s two tallest condominiums, The Laurel on Rittenhouse Square and the Arthaus on Avenue of the Arts, are also expected to welcome their first residents in 2022.
3) Affordability is becoming increasingly important.
Gillen’s Philadelphia Housing Affordability Index rose to a new all-time high this summer as the average house price in the city rose to 4.5 times the median household income. This means that priceless housing is not only the result of a lack of income, as is the case with roughly one in four Philadelphians, but also the result of rising house prices. “The fact that price growth has outpaced household income growth in recent years also seems to indicate that more homes are becoming less affordable (or even unaffordable) for more and more households in Philadelphia,” Gillen wrote in his summer 2021 market report .
This has raised concerns about the impact of new housing on property prices, particularly in parts of north and west Philadelphia. So far, however, there have been no concerted efforts to improve affordable housing for the broad middle of the urban population. However, a bill to raise money for a variety of housing development and construction education programs, including first-time aid, affordable housing, basic homeowner systems repairs, and various forms of rental housing assistance, went into effect earlier this year: the Development Impact Tax.
This tax, which is a fixed fee for new builds and 1 percent of the cost of remodeling and renovations, is levied starting January 1st. That’s also the date when the 10-year property tax credit for new builds and improvements is cut in half by converting it to a sliding scale that shrinks over each of the 10 years. The Building Industry Association of Philadelphia helped shape the impact tax but opposed the cut; It remains to be seen whether the reduction will dampen new construction activity in the future.