After a trying two years of property transactions, the past year in Southeastern Pennsylvania real estate has given many would-be buyers and sellers reason to pause. Though few expected the surprise pandemic-driven seller's market to continue unabated, the first signs of a cooling market were originally forecast for later in 2022, not early in the first quarter.
Despite the slowdown, there are opportunities for buyers and sellers along the Main Line region, in and around Philadelphia, as well as the whole of Southeastern Pennsylvania. That cautious optimism also carries into the Cheltenham, PA, real estate market.
Let's take a brief look back at area real estate in 2022 and then look ahead to Pennsylvania real estate market prices and the forecast for 2023. Overall, Southeastern Pennsylvania real estate remains a safe and exciting investment opportunity.
2022 recap: Cheltenham Township real estate remains a steady investment
Located 20 minutes north of downtown Philadelphia, Cheltenham Township is one of the region's most storied enclaves. Dating back to the 1680s, it stands among the oldest of Philadelphia's neighboring communities and is home to the Richard Wall House, the second oldest house in the state.
The township's history, notable architecture, outstanding schools, and eclectic dining scene keep it near the top of the area's most desirable suburbs to call home. These amenities and its ideal Montgomery County location have buoyed the market against the encroaching financial realities.
Over the past year, home prices across Montgomery County have risen 9% annually. This increase should give buyers and sellers hope; sellers can know that their properties have continued to appreciate, and buyers can rest assured that Montgomery County remains a solid investment.
What are the economic concerns threatening to bring post-pandemic recovery to a halt?
There are a few that buyers and sellers must wrestle with including the most pressing trifecta of inflation, interest rates, and inventory. In fact, the vast majority of positive and negative factors that all interested parties must deal with will derive from one of these three influencers.
Inflation and interest rates
Above all else, the most immediate item that's impacting both buyers and sellers is inflation. Currently sitting at a 40-year high, increasing inflation can damage the local, state, and national economies more than any other factor. It's responsible for soaring costs of critical, everyday goods and services, including food, lodging, and many big-ticket items such as furniture, used cars, and trucks.
Inflation has led to rising interest rates. Although these have risen from their historic lows in 2020 and 2021, they have lowered somewhat from where they sat at the end of 2022. Sellers and buyers are encouraged to work with a qualified, experienced real estate professional
. A real estate agent can help sellers market their home and choose the best price, while buyers will have an expert in their corner to help them negotiate the best deal possible.
The primary force guarding against mass drops in home prices across Southeastern Pennsylvania is the marketplace's current inventory. Many of Philadelphia's surrounding suburbs weren't flush with available homes leading into the 2020 pandemic.
The spate of bidding wars that erupted for homes in the latter half of 2020 and throughout 2021 reflected a market devoid of any meaningful amount of homes for sale. At its height, there were several months in 2020 and 2021 where Cheltenham and surrounding communities saw inventory dip below one month's supply.
To put that in context, though conditions are always market-based, a seller's market typically occurs when supply drops below four months. Buyers usually gain the upper hand at anything beyond six months. Right now in Philadelphia, inventory for all residential housing sits at three months. For single-family homes, it's just under two months.
Further complicating the issue of inventory is new construction. With increasing costs in land, materials, and labor, and still rising interest rates, new housing starts are few a far between. That said, given Montgomery County's immense livability and popularity among homeowners, pockets of new development exist across the area.
Opportunity exists for market participants
Rising inflation and economic uncertainty are rarely cause for celebration. However, the marketplace is far from bottoming out. Given conditions elsewhere in the country, what proposes to be a relatively flat year for the local residential market may prove a net positive for buyers and sellers alike.
Affordability will be the biggest issue facing buyers in the coming months. After running in place against a stout two-year-long seller's market, it's tough to accept that buyer power may be further reduced in 2023.
In addition, home prices may be dropping slower than one would like, but they're not going up either. Even in Montgomery County's most competitive markets, prices may plateau with no more than a one to two percent rise in value, if at all. Inventory will also remain tight, but expect more houses to hit the market in the coming months as sellers can no longer play the waiting game.
There is plenty of upside and several options for the savvy, opportunistic buyer.
This year will see lower demand and a slowly widening inventory of homes. If there's flexibility in your purchase plans, a broader search will yield a considerably greater selection of homes. Yes, the most popular neighborhoods will still see multiple bidders vying for the same property, but in 2023 that will be the exception, no longer the rule.
You can also work around the higher interest rates should you be willing to take on some risk. The primary option is to take advantage of properties with reduced prices, with enough of a down payment to avoid PMI. Then as interest rates recede, refinance the home to a more palpable monthly note. The drawback is that if rates remain high, the value of the home you purchase stays static or decreases.
Buying down, which is simply paying a bigger chunk of the mortgage balance at closing to secure a lower rate, is another option that works for those who plan to make a long-term commitment to their new purchase.
And, should you have the wherewithal and cash on hand for a not-financed purchase, it could mean a fairly sizable discount from a motivated seller. Your best bet as a buyer is to partner with a real estate professional like Tabitha Heit
. Her expertise and business acumen make her the perfect partner in this tricky market. Reach out today to take advantage of everything she has to offer to get your buying journey started.
Admittedly, the stunning seller's market produced by the pandemic’s unique circumstances wouldn’t last forever. However, if your potential listing is in one of Montgomery County's sought-after communities, there's still room for a more than decent return. Ensure the home is well-conditioned and appropriately staged to promote multiple high-value bids.
Keep an eye on local market changes throughout 2023. Subtle changes can provide clues as to when you should list your property. Market at the right time, and there's still plenty of money to be made if yours is one of the few viable luxury properties available.
Seek a seasoned local listing agent
who can help plan a winning strategy for your sale and post-closing needs. Sellers will continue to have the advantage in 2023, but it will be a considerably more buyer-friendly market than you have been accustomed to.
Seeking your Southeastern Pennsylvania opportunity?
Whether buying or selling, is the time right for you to explore some of Philadelphia's most celebrated suburban markets? From homes for sale in Cheltenham to Chestnut Hill real estate, contact Tabitha Heit
today, and allow her knowledge and local expertise to be your guide to Montgomery County's real estate market.