Philadelphia’s condo market is still struggling to recover from the pandemic, lagging the frenzied overall housing market in speed and price appreciation. How much and how quickly condos catch up will depend on more home buyers being comfortable with group living in the city two years into the pandemic.
Despite surging prices in the broader housing market, the median price of condos in Philadelphia stayed flat from March 2021 to March 2022 at $340,000, according to the multiple listing service Bright MLS. Condos in the city remained on the market for a median of 42 days. That’s down from 69 days in March 2021, but the metric lags the 17 days for the city’s housing market as a whole.
Condos are “a really segmented set of the market” that often behaves differently from the overall housing market, said Drexel University economist Kevin Gillen. Generally, people who buy condos are looking for different features from those who buy houses.
“People who are buying condos, it’s a lifestyle decision,” said David Wilk, assistant professor and director of the real estate program at Fox School of Business at Temple University. Condo owners generally don’t want the hassle that comes with maintaining a single-family house and want to be near restaurants, shops, and entertainment. That’s still the case during the pandemic.
“There’s a big shift of people who are really looking for more of that urban experience rather than having to get in the car and drive everywhere,” Wilk said. And two years into the pandemic, he said, “it feels like we’re coming back from COVID.”
A bright spot for condos in the city this spring has been the number of units going on the market. In Philadelphia, new listings of condos and cooperatives reached a 10-year high in March, according to Bright MLS. The city had 372 new listings this March, up slightly from 343 in March 2021 and up from 214 in March 2020.
Philadelphia condos can be attractive to first-time home buyers, retirees looking to downsize, empty nesters from outside the city, young families with small children, and investors who buy units to rent to tenants.
The Laurel Rittenhouse Square luxury condo building is scheduled to open in the fall and has sold just over half of its 64 condos, according to developer Southern Land Co. Last year, the developer had hoped to reach this milestone by late summer 2021.
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Most affluent Center City condo owners are older residents, who have been more likely to think twice about shared spaces during the pandemic, Gillen said. Some may have paused their plans to buy condos because of COVID-19 restrictions in the city and in multiunit buildings.
“They personally need to see a signal from our city government that COVID is truly behind us,” Gillen said. The city’s condo market will rebound, but it will take time and depend on rising confidence, he said.
Rising condo prices in the collar counties
In the counties surrounding Philadelphia, which have fewer condos, prices for these homes have risen faster than prices for single-family homes, which follows national trends. The median price for condos in the Philadelphia metropolitan area hit an all-time high last month at $260,000, according to Bright MLS. That’s up 18% from March 2021.
Last month, median sales prices of condos in Chester and Gloucester Counties reached 10-year highs, according to Bright MLS. The Pennsylvania county’s median price of $285,000 was up 23% from the same time last year. The New Jersey county’s median price of $198,000 was up 22%.
In Montgomery County, the median sales price of condos last month was $240,000 — up 23% from the same time last year. Delaware County’s median sales price jumped 44% — up to $245,000.
Young professionals looking for more affordable first homes
Condos are about half of Philadelphia real estate agent Ashley Lauren Farnschlader’s business right now. Of her condo clientele, “it’s overwhelmingly young professionals,” said Farnschlader, an attorney and Realtor at Compass in Center City.
She’s working with two separate thirtysomething clients who are moving from Delaware and Florida for work and searching specifically for condos in the Fishtown and Northern Liberties areas, where these units are in short supply. With rents rising and homes quickly building in value, these home seekers and others like them want to take advantage of a strong market that is pricing out some potential buyers.
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“They see [homeownership] as a way for them to build wealth,” she said. “And they want to get their foot in the door at a price that is reasonable to them.”
They determined that condos are a more affordable option that gives the best value for what they’re looking for, she said. They’re buyers who want amenities in their buildings as well as their neighborhoods and who “want to enter the home-ownership phase of their life but don’t really want to deal with maintaining everything,” she said.
One client who wants to move to the city from northern New Jersey loves theater and wants to be near arts venues. She retired this year and likes that some condos include utilities, which means a fixed monthly housing cost.
Many of Farnschlader’s clients are looking for condos in the range of $350,000 to $450,000, which she has found to be a popular price for buyers.
“I’ve actually seen bidding wars on condos recently” in mid-rise and smaller buildings, she said. “This is a bit of a change in 2022.″
But that’s not the case across the board. She listed a condo for sale at 15th and Chestnut Streets in March that has had a couple price cuts, including one of $9,100 in the last month. Potential buyers have liked the city views, she said, but one bedroom is smaller than the other, and people want two equally sized rooms. The seller is considering a recent offer.
Farnschlader said she’s hopeful about the spring market for condos.
“Buyers in general are trending back to downtown living,” she said, which bodes well for the condo market. “Overwhelmingly, I’m hearing that people feel comfortable downtown and being out.”