DB Digest: The Battle of Housing Costs & Wages

Whether you're looking to buy, rent, or sell a home or simply enjoy staying informed, this report has something for you!

And for those who have asked,?no, this is not automated.??

That's right,?I type out every word you see (unless there's a typo, then?it's automated???).

Weekly Market Report, August 7th-13th, 2023 ??

• Contracts Up This Week but Continue Decline.?There were 1,908 new purchase contracts this week in Philly Metro, up +2% from the prior week, despite a?typical downward?trend during this time of year.?However, new?purchase contracts are tracking well below last year’s level by -18.1% as we are in the midst of a buyer vs seller?stalemate.
• Listings Stable but Limited.?New listings are down 3.8% less compared to a week ago and are -10.5% lower than last year at this time. While listings are scarce and supply is limited, there is more stability week to week in new listings than is typical during this time of year when new listings begin to trend downward. As a result of decreased purchase activity, it’s possible that over the next few months new listings could return to levels more similar to a year ago.
• Showing Activity Continues to Slow.?The pace of the housing market is not slowing as much as it typically does at the end of the summer, but buyers are clearly showing their frustrations with the current conditions.?Showing activity is down -3.8% compared to a week ago and -13.9% from this time last year.?Whether it's a decrease in?listing prices (not yet), interest rate improvement (not yet), or simply more options to choose from (def not yet), frustrated buyers are looking for something to get excited about in the coming months!

TLDR:?New Contracts Up Now but Down Long Term,?New Listings?Volume Continues to Decline, Buyers are Frustrated For Good Reason?

Just Numbers, For Your Education

Don't shoot the messenger.??The true cost of housing has gone up dramatically in America?and no one should tell you otherwise.?

In 2019, the average home price in America?was $375,000 and interest rates were hovering around 3.5%.?While the cost of housing was still substantially higher than than previous generations when accounting for wages and inflation, we didn't know just how good we had it, as the percentage of the average income towards housing was 29.88%.

Fast forward 4 QUICK years (was the lockdown just a fever dream?) and the landscape?of?housing affordability has completely shifted.?Home prices now sit at around $495,000 nationally, despite interest rates above 7%.?This brings the average percentage of income that is being spent on housing to a whopping 54.18%!

*These numbers are strictly based on home prices, wages, and P&I. They do not factor in the increased cost of living, inflation, and other home costs such as insurance*

What About Renting?

The other option, of course, is to rent.?Median rent for a 2 bedroom apartment in the US now sits at $1,862 but is well above $2000 or even $3000?in many major cities.?While this is the cheaper option for many?today, that is not true in all markets and you should do some research before making a decision.??

Renters are also historically hit with a?minimum?of a 3% bump on that rent every year (see below chart), all while paying "100% interest" since they have no ownership of the unit.??If you can afford to do?it, buying is still the much better long term play since monthly payments are guaranteed to remain constant, or even go down (refinancing), over the next 30 years, all while you are paying equity to yourself as the property appreciates.?However, the reality is that fewer people have the luxury of making that decision, as the true cost of home buying?has skyrocketed these past few years.?

My job is to help educate my clients, so that they can feel confident in making an informed decision. As you can see, I'm not for lying or spinning the facts to fit a false narrative and make a sale.?I don't play that game.

I'm always available to further explain and/or help, whether it be on the buying, renting, selling, or curiosity side.

One Last Note:?The real estate market is never as good or as bad as it seems in the moment, so take a deep breathe and truly evaluate the situation. Every year, people look back and regret not making the purchase they could have made in the moment because they thought conditions would change for the better.

Nobody can time the real estate?market with certainty, but everybody can adjust to current market conditions and interest rates once they already own a property!

Want to chat?

Shoot me a message to discuss your next steps and options!

C: 215-779-8961

E: [email protected]

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