Marcy and Ricky Komdat felt attached to their neighborhood in Haddon Township, where they purchased their first home in 2019. Neighbors are sweet. Streets are tree-lined. Marcy’s parents are nearby. The couple goes for runs along the Cooper River with 15-month-old daughter Josephine.
The Komdats, both 35, wanted a bigger “forever home.” But they saw houses on their block go on and off the market in the same week. Marcy’s sister has been looking for a house in the area for more than a year.
They were deep into plans for an addition when their Realtor told them he had older clients nearby who wanted to downsize and had listed their house for sale. They, too, wished to stay in the area. So the couples bought each other’s houses. Last month, the Komdats moved into their new home three blocks away.
“It had everything we were hoping to do with the addition and more,” Marcy said. “We were incredibly lucky.”
Buyers increasingly have fewer choices of homes to purchase. Inadequate supply and rising demand continue to fuel buyer competition and push up prices, placing homes out of reach for more aspiring Philadelphia-area homeowners in what has traditionally been a relatively affordable region.
Supply of existing homes in the Philadelphia metropolitan area — which includes Camden County — fell below one month’s worth in December and dropped even more in January, according to the multiple listing service Bright MLS. About six months of supply is considered a balanced market.
Months of supply is an industry measurement of how long it would take for all homes currently on the market to sell, assuming that no new homes were listed and homes continued to sell at the current rate.
Supply hovered at just above one month throughout 2021, peaking in September at about 43 days.
Given the rate of sales, homes on the market in the Philadelphia region would sell in about 27 days, according to Bright MLS. Supply is six months below where it was the same time a decade ago, due to a combination of builders constructing too few homes, local zoning restricting development, a large generation — millennials — entering prime home-buying years, and investors holding on to lucrative rentals.
Too few homes on the market
Bucks, Burlington, Chester, Delaware, Gloucester, and Montgomery Counties had roughly 15 to 18 days’ worth of housing supply last month. Philadelphia had the most inventory in the region at 54 days’ worth. That’s down from 72 days last January.
“Everybody is competing for the small amount of supply that’s currently available,” said Christopher Beadling, president of the Pennsylvania Association of Realtors.
Home sales throughout Pennsylvania dropped 29% in January compared with December, according to a Pennsylvania Association of Realtors report. Sales are down about 4% from the same time last year.
“It’s not because buyers said they don’t want to buy anymore. … It’s because sellers didn’t make homes available for those buyers to get their hands on,” Beadling said.
More home listings should hit the market in the spring in line with seasonal trends, he said, but not enough.
Philadelphia’s program that gives first-time home buyers grants of up to $10,000 to purchase homes is set to reopen this spring with new funding. But David Thomas, president and chief executive officer of the Philadelphia Housing Development Corp., said he is worried that those who need assistance through the Philly First Home program won’t be able to find homes for sale in their price range, which is typically about $200,000.
“There’s not much out there,” Thomas said last week at a panel on racial home ownership gaps. A majority of people receiving grants are Black or brown, he said. “I’m really concerned about how this program will move forward.”
Last month, homes sold for a median price of $300,000 in the Philadelphia area. That’s up from $275,000 in January 2021. The median price in the city was $250,000 last month, up 4% from the same time last year and up 16% from January 2020.
Over the last couple of years, Philadelphia has become the least affordable county in the region to its residents, according to an analysis of sales and income data by Drexel University economist Kevin Gillen. The rate of unaffordability in the city also has outpaced the country as a whole. It’s a worrying trend that threatens Philadelphia’s reputation as a city of homeowners, he said.
“The average Philadelphia home is now unaffordable to the average Philadelphian,” he said.
Pressures on housing supply
The region’s existing housing supply at the end of January fell below 7,000 homes for the first time in Bright MLS records dating to January 2003. New-home listings were at a decade low in January.
In January 2013, the region had more than seven months of housing supply, a market that favored buyers.
Given the lack of existing homes, demand for new homes is strong. But supply chain delays and shortages of building materials and workers continue to slow construction.
“Production disruptions are so severe that many builders are waiting months to receive cabinets, garage doors, countertops, and appliances,” Jerry Konter, chair of the National Association of Home Builders, said in a statement.
The resulting cost of these building challenges nudged the Komdats into buying instead of renovating. They took a risk in October by submitting an offer that wasn’t contingent on the sale of their own home. Their flexibility helped them win the house. When they were ready to sell themselves the following month, their sellers’ offer of cash and love of the neighborhood beat out other offers.
Their Realtor, John Kennedy with Coldwell Banker Realty based in Haddonfield, said he’d never before encountered a housing swap in his 20 years in the business. He said he thinks housing supply will tick up soon, so buyers don’t have to hope for such an unlikely scenario.
“But,” he said, “I’ve been saying that for a while.”