2023 Housing Market Review for Chester County
As we enter into 2024, there are items that remain certain in the current housing market from 2023 – few new listings, continued low inventory, and a fast-paced environment. While interest rates reached a 23-year high in the fall of 2023, too few homes on the market for prospective buyers continued to be the larger issue in the Mid-Atlantic housing market. The continued high demand and low inventory lead to strong price growth across the area, especially in Chester County.
How do 2023 levels compare to pre-pandemic levels? What’s considered a “normal market” today? Bright MLS, the multiple listing service used in the Mid-Atlantic, released a report that compared 2023 to 2018, as 2018 was the last year the housing market had more typical home sale activity and price growth. So what difference did 5 years make in the housing market in the Mid-Atlantic? Here is how 2023 compared to 2018:
52,000 fewer home sales.
124,000 fewer new listings.
1.52 months of supply at the end of 2023, well below the typical 4-6 month supply of a balanced market.
$110,000 higher median home price.
2% higher mortgage price.
Although the pandemic brought many people out of the cities, it appears people are starting to move back again. Home sales in Philly, D.C., and Baltimore accounted for 13% of sales, similar to pre-pandemic levels. With buyer levels in the suburbs declining elsewhere, they have remained high in the Philly suburbs. This is part of the reason why single-family detached homes are so hard to come by.
As many of us recall, there was a surge of people from the city coming to the suburbs for more space during the pandemic. When they came to the burbs, they snatched up many of the single-family homes with interest rates below 3%. Due to that, not many people are moving and giving up their rates, so the active new listings of single-family homes in 2023 were down by almost 30,000 homes - 15,406 new listings in 2023 compared to 44,635 in 2018. With this low inventory, prices have sky-rocketed.
In the past 10 years, the median home price in the Bright MLS area has increased by almost 60%, with the biggest gains happening in 2020 and 2021. Usually, prices tend to moderate when mortgage rates are higher, but 2023 was an exception. But how? Repeat homebuyers with record equity and cash buyers, who accounted for about 25% of home sales, fueled the growth. While we expect the number of cash sales to return to pre-pandemic levels in the next 3-5 years, here is what else we can expect in that time frame:
Inventory remains tight, with demand outpacing supply.
Few days on the market with buyers competing for low inventory.
Redefine a ‘balanced’ market to have 3 months of supply, not 4-6 like before.
Appreciation will become steady and in line with historic trends.
How has Chester County fared in this current housing market? Here is a look at how it has changed over the last year.
While the active listings at the end of the year remained the same for Chester County, there were 1,233 fewer closed sales than in 2022. Due to that, the median home sale price surged by $30,000 despite high interest rates. What will 2024 look like for our county? It appears the spring market has already started - so let the games begin!
